CSRDG



 FOREWORD
I am pleased to present the first study and analysis of the public expectations and perceptions of
Corporate Social Responsibility in Georgia. The study was conducted in partnership between the
UNDP project that promotes the UN Global Compact, and the Center for Strategic Research
and Development of Georgia (CSRDG).

Corporate Social Responsibility is increasingly becoming an important tool for fostering

sustainable human development worldwide. In addition to its moral value, the strength of the
CSR concept is in multiple and long-term benefits CSR practices bring to all stakeholders and
beneficiaries and primarily, to the companies that voluntarily choose to take into account
economic, social and environmental aspects of their operations. Although this concept is new for
Georgia, it has been gradually adopted by young but dynamic private sector that is open to global
trends of innovation and eager to play a role in shaping a better future for Georgia.

The UN Global Compact the largest worldwide CSR initiative championed by the UN is the
major avenue for cooperation between the UN and private sector in Georgia. The Global
Compact Georgia Network currently unites over 30 CSR-sensitive companies, Civil Society
Organizations and educational institutions.

This current Study is yet another expression of the UN support to developing responsible
business practices in Georgia. It provides essential mapping of the local context for developing
CSR in Georgia. It explains what average citizens think of the way in which the private sector
can contribute to development, and what in particular they expect businesses to do to make this
important contribution. In addition to being an interesting source for experts, the report includes
practical and useful recommendations for practitioners promoters of corporate responsibility,
and company managers.

I hope that this study will stimulate a nationwide debate on the potential of a CSR approach for
development in Georgia and the specific ways in which this concept and practice should be
adapted to local realities for the benefit of the people of Georgia.

Robert D. Watkins

UN Resident Coordinator

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 ---

Since it was first established, the Centre for Strategic Research and Development of Georgia has
devoted considerable time and effort to research activities. The aim of CSRDG research is to
study, analyze and highlight important processes on a country level. CSRDG experts
continuously assess and study international experience and trends to facilitate the integration of
innovative approaches in Georgia. One such trend is corporate social responsibility.

This issue has been one of the priorities of the CSRDG since 2004. In order to analyze
international experience and current practice in Georgia, the CSRDG launched a new research
project, Social responsibility of business in Georgia challenges and perspectives. The
research report submitted for your review represents a part of the afore-mentioned initiative. It
must be mentioned that a second survey has also been carried out within the framework of the
project; Large business in Tbilisi and corporate social responsibility attitudes and practices.
Social responsibility implies the participation and interaction of two parties; business companies
(implementing parties) and society groups (beneficiaries). In this respect, the two research
projects are complementary and help to analyze developmental trends of social responsibility,
within a Georgian context, from different perspectives.

With the aim of promoting the development of corporate social responsibility in Georgia, the
CSRDG cooperates effectively with the regional project of the UNDP; "Fostering Multi-
stakeholder Partnerships to Achieve MDGs in the Western CIS and the Caucasus in the
Framework of the Global Compact. This research report is one of the products of this
cooperation. The results of the research will help to identify future avenues of development of
social responsibility in Georgia and to raise public awareness of the importance of social
responsibility for the country. This, in turn, will contribute to the establishment of favourable
conditions for the development of social responsibility in Georgia.

Since contributing towards the development of social responsibility in business is one of our
strategic priorities, the CSRDG will continue working on the issue and will deepen cooperation
with socially-oriented business companies. Social partnership represents a significant
component of social responsibility. The CSO sector has already gathered sound experience in the
implementation, monitoring and evaluation of social programmes. Thus, cooperation between
business organizations and civil society organizations is considered of great importance during
the planning and implementation of such programmes. The partnership between CSOs and
business will increase the effectiveness of social projects and contribute to an improvement in
the quality of life in the country.

Eka Urushadze,

Executive Director

The Centre for Strategic Research and Development of Georgia

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 C ONTENTS:

Objective of the Study and the Practical Value of its Results 7

I. SUMMARY 8

II. Methodology of the Study 13

2.1 General Methodological Approach Local-context-specificity vs. Standard Checklists 13

2.2 Geographical Focus 14
2.3 Method and Instrument 14
2.4 Target Group Selection Focus Groups 14
2.5 Public Opinion Survey - Methodology, Technique and Instrument 15

III. The Role and Place of Business in Society Perceptions and

Expectations 16

3.1 The Role of the Private Sector in Development 16

3.2 Positioning of the Private Sector relative to Society and Institutions 17

IV. The Role of Business in Development and Local Legitimacy

of CSR as a Voluntary Choice for Businesses in Georgia 19

4.1. Factors that Determine the Success of a Private Business Enterprise Public Perceptions 19
4.2 What Factors Form Current Public Attitude toward the Private Sector 22
4.3 General Attitude toward Responsible Business Practices/CSR as a Legitimate Voluntary
Choice for Businesses 27
4.4 Priority Areas of CSR as Perceived by the Respondents 29
4.5 Public Expectations of the Role of the Private Sector in Development 30
4.6 Perception of the Actual Role of the Private Sector in Development 32
4.7 Current Expectation Gap 35

V. Most Demanded Areas for CSR 36

VI. CSR and Corporate Charity 39

6.1 Forms of Corporate Giving Expected 39

6.2 Forms of Corporate Giving Practiced 40
6.3 Awareness of Particular CSR Activities and Corporate Giving 41
6.4 Expectation to Perception Gap for the Forms of Corporate Giving 43


VII. Preferred Models of Corporate Giving 45

VIII. Motives for Practicing CSR 46

IX. Stimuli for CSR Expectations and Awareness 48

X. Impediments to CSR 50

XI. Information Regarding Corporate Giving and CSR 51

11.1 Ranking of the Major Sources and Media of Information 51

11.2 Trustworthiness of Available Information by Source 52
11.3 The Nature of Available Information Negative to Positive Information Ratio 53
11.4 Is Available Information Sufficient? 53
11. 5 Expectations as to the Content of Information Demanded 54
11.6 Demand for Social Reporting and CSR Information. 55
11.7 Preferred Media and Sources to Meet Demand for Social Reporting and CSR Information 56

XII. Conclusions and Recommendations for Company

Managers and Promoters of CSR in Georgia 57

12.1 The Meaning of CSR in a Local Context 57

12.2 Media and Sources of Information 61

XIII. Demography of the Study 65


 OBJECTIVE OF THE STUDY AND THE PRACTICAL VALUE OF ITS RESULTS
The internalization of Corporate Social Responsibility (CSR) in company policies, management
and practices is a new development in Central and Eastern European countries, including
Georgia. There is no standard recipe for socially responsible business practice such
practices vary by company and country. Consequently, there is no single all-inclusive and
universal definition for CSR. The EU definition of CSR is as follows:

A concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis -
(Commission Green Paper 2001 Promoting a European Framework for Corporate Social
Responsibility, COM(2001)366 Final)

Amongst other things, this definition helps to emphasize that:

x CSR covers social and environmental issues, in spite of the English term corporate
social responsibility;
x CSR is not and should not be separate from business strategy and operations: it is
about integrating social and environmental concerns into business strategy and
operations;
x CSR is voluntary;
x An important aspect of CSR is how enterprises interact with their internal and
external stakeholders (employees, customers, neighbours, non-governmental
organizations, public authorities etc.)1

A systemic, well-strategized and planned campaign to increase CSR awareness or to set up

effective CSR management of a company, requires mapping local context through a properly
designed and methodologically sound study. A non-governmental promoter of CSR and, equally,
a CSR manager of a company, require at least basic information about the current social
demands, perceptions, attitudes and expectations of the general public - that is, a wide spectrum
of consumers - toward responsible business practice in the private sector.

Interestingly, the majority of recently-conducted CSR studies target the supply end of CSR, i.e.
focus on the CEOs and managers of the companies when inquiring into the relevant factors of
corporate awareness and behaviour. Similar studies conducted in Georgia have provided
important information of practical value. However, a mapping study targeting the receiving end of
CSR was required. The Study of Public Perceptions and Expectations for Corporate Social
Responsibility in Georgia, conducted jointly by Georgia Global Compact Network, The Centre
for Strategic Research and Development of Georgia (CSRDG) and ACT Research, aimed to
bridge the existing gap and map the context of Georgian society with regard to CSR.

The overall objective of the study was to map perceptions and expectations at the receiving end of
Responsible Business Practices/Corporate Social Responsibility in Georgia; that is, society at
large. The study inquired into the issues and thematic areas that are essential for understanding
the nature and structure of general public demand for Responsible Business Practices/Corporate
Social Responsibility in the country, focusing on the Tbilisi population. Thus the study addressed
such questions as:
- What role, if any, does an average citizen believe business should play in development?

1 http://ec.europa.eu/enterprise/csr/index_en.htm

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 - What place does society assign to Responsible Business Practices within the expected
role of business in development?
- Does society expect the private sector to be socially responsible?
- Does an ordinary citizen think that the policies and practices of the current private sector
players are informed by a Social Responsibility approach?
- Why does an ordinary citizen expect a private company voluntarily to practice social
responsibility in addition to complying with existing legal requirements?
- What are the particular expressions of Responsible Business Practice that are most
demanded by the general public?
- Are companies doing enough in terms of CSR?
- What factors facilitate or impede the practice of CSR by companies?
- Through what media channels and sources of information do people learn about CSR
practices in Georgia?
- Which media channels and sources of information are more effective and trustworthy
compared to other media channels?
- Is there sufficient public information regarding the CSR practices of companies?
- What kind of information is required by the general public?

The Study Report below includes a presentation and analysis of the major findings of the study.
Due to the overall objective and design of the study, the data generated may prove instrumental
in understanding the character and structure of the demand for CSR on the part of the broader
society, and thus facilitate effective planning and strategizing for CSR awareness-building in
Georgia. In addition, the data produced by the study may serve as a general guide for CSR
managers and planners in private sector companies.

An awareness of trends in public perceptions and attitudes toward CSR is essential to

understanding the present local context as well as current trends in public opinion and public
demand. Hopefully, the study of CSR in Georgia will continue and the data of the 2007 study
serve as a baseline against which to compare similar data sets produced through further research.

I. SUMMARY

The objective of the study was to map the meaning and rating of CSR and its particular aspects,
areas and practices in Georgia through an inquiry into the perceptions and expectations of
average citizens, i.e. residents of Tbilisi.

The Study focused on Tbilisi residents as, in addition to meeting organizational and budget
limitations, up to 80% of economic activity in the country is concentrated in Tbilisi, and the
Tbilisi population constitutes 25% of the population of Georgia2. Thus, regardless of perceived
similarities between the population of Tbilisi and other areas of Georgia, the data and analysis
can be generalized for Tbilisi only.

The methodological approach selected for the study required the identification of the role of
CSR within the broader context of Corporate Giving, and the even broader local discourse for the
role and place of the private sector in society, and in the process of development as perceived by
general public.

2 According to the data of the State Department of Statistics of Georgia as of January 1, 2006.

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 The majority
The majority of
of respondents
respondents(72%)(72%)ascribe
ascribetotobusiness
businessan animportant
importantor oratatleast
leastrelatively
relatively
important role in development. In current public perception, this role,
important role in development. In current public perception, this role, in terms of in terms of both
both
perceptions of reality and expectations, is almost as important as the role of Government.
perceptions of reality and expectations, is almost as important as the role of Government. Tbilisi
Tbilisi respondents assign to the private sector almost as important a role in development
respondents assign to
as the government, buttheconsider
private CSR-related
sector almostfactors
as important
the leasta important
role in development as thethe
in determining
government,
actual successbutof consider
companies CSR-related
in Georgia.factors the least as
Nevertheless, important
many as in determining
93% the actual are
of the respondents
success
convinced that, in addition to the primary objective of maximizing profit, and whileare
of companies in Georgia. Nevertheless, as many as 93% of the respondents adhering
to current that,
convinced legal in
requirements, companies
addition to the should assume
primary objective a voluntary
of maximizing profit,responsibility for to
and while adhering
current legal requirements, companies should assume a voluntary responsibility for process
addressing the needs of society and take into account developmental implications in the
of decision making and ongoing business operations.
addressing the needs of society and take into account developmental implications in the process
of decision making and ongoing business operations.

Interestingly, the study revealed that respondents clearly regard CSR as the choice of Big
Interestingly, the study revealed that respondents clearly regard CSR as the choice of Big
Businesses rather than SMEs, which are perceived as being too weak and incapable of
Businesses
responding torather
publicthan
demand SMEs, which are
to produce anyperceived as being too weak and incapable of
tangible impact.
responding to public demand to produce any tangible impact.
Among the issues that, in general terms, must determine the reputation of companies
within broader
Among society,
the issues Tbilisi
that, in inhabitants
general terms, must listeddetermine the reputation
several factors related to of companies
Corporate Giving and
within
Responsible Business practices: Employing locals as opposed to
broader society, Tbilisi inhabitants listed several factors related Corporate Giving and importing an inexpensive
workforce from
Responsible abroad
Business (ranking
practices: 2); Takinglocals
Employing care of own employees/good
as opposed to importing an corporate
inexpensive
welfare (ranking 4); Charitable projects funded and implemented by companies/corporate
workforce from abroad (ranking 2); Taking care of own employees/good corporate welfare
philanthropy(ranking 11); Honesty toward shareholders and suppliers (ranking 10); Taking
(ranking
care of the4); environment
Charitable projects funded
(ranking and implemented
13); Using by companies/corporate
local production input/raw materials as opposed
philanthropy(ranking 11); Honesty toward shareholders
to imports(ranking 5). However, when the respondents were asked to name and suppliers (ranking 10);companies
existing Taking
which
care of they considered good,
the environment (rankingthe13);
relative
Using weight
localofproduction
the CSR-related
input/rawfactors as markers
materials of
as opposed
reputation was much higher.
to imports(ranking 5). However, when the respondents were asked to name existing companies
which
As forthey considered good,
the legitimate areas forthe CSRrelative
that weight of the CSR-related
were considered as a valid factors as markers
and necessary of
voluntary
reputation
choice for was much higher.
big businesses, there were only three relevant areas identified: supporting economic
development; addressing 3
social and socio-economic problems of society and protecting
As
thefor the legitimate
environment. areassociety
Broader for CSR thatsee
didnt weretheconsidered as a valid
direct relevance and important
of such necessary voluntary
areas of
choice for big businesses,
CSR (determined by the UN there were Compact,
Global only three which relevant areas
is the identified:
largest supporting
worldwide economic
CSR initiative)
as Human Rights,
development; Labour Rights,
addressing Anti-corruption,problems
social and socio-economic for manyof interrelated
society and reasons. Most the
protecting
importantly, addressing these problems is regarded as a compulsory
environment. Broader society didnt see the direct relevance of such important areas of CSRlegal obligation rather than a
voluntary choice, and government is afforded a prerogative to ensure compliance.
(determined by the UN Global Compact, which is the largest worldwide CSR initiative) as
Human Rights, Labour
The Expectation Rights, andgap
to perception Anti-corruption,

as to the rolefor of many interrelated
business reasons. Most
in development is
considerably high; 93% of the respondents think that CSR is a voluntary
importantly, addressing these problems is regarded as a compulsory legal obligation rather obligation that should
than a
be assumed
voluntary by businesses
choice, and is a is
and government legitimate
affordedexpectation
a prerogative ontotheensure
part of society, while only 53%
compliance.
consider that, in addition to maximizing profit, businesses should Also take care of public needs
and development
The Expectation(including
to perceptionprotection
gap4 as of tothetheenvironment).
role of business TheinExpectation
development gap isfor definite
considerably high; 93% of the respondents think that CSR is a voluntary obligation that should
be assumed by businesses and is a legitimate expectation on the part of society, while only 53%
consider that, in addition to maximizing profit, businesses should Also take care of public needs
and development (including protection of the environment). The Expectation gap for definite

3 The term Legitimacy in this context refers to general approval by the citizens of CSR as a right choice and fair
course of action chosen by Private Sector players.
4 Expectation to Perception Gap refers to the difference between the strength, degree and amount (if applicable) of

public expectation for certain developments to take place, and the assessment by the same group of people of the
actual state of affairs in the relevant area.

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 action (does/should care for assessments) in the supporting economic development
category for big business is considerable, at 64% (the difference between the expectation
rating, at 91% and the perception rating at 27%). The gaps for addressing social and socio-
economic problems of society and Protecting the environment are very high as well (65%
and 75% respectively).

The areas of CSR that are most insisted upon were identified within a broader list, which
reflects the local perception of Responsible Business Practices and Corporate Giving and is
comprised of the spontaneous answers of the respondents. The factors most frequently referred
to include: Addressing the needs of economically vulnerable groups (54%); Providing
employment to the local communities (54%); and Corporate charity (41%).

When we consider the preferred forms of Corporate Giving i.e. rating of CSR vs. Charity -
the majority of Tbilisi respondents (78%) prefer CSR project activities, while 21% prefer
immediate and specifically targeted corporate charities. While it is true that the respondents
clearly prefer a CSR approach, at the same time they suggest that corporate giving projects that
provide long-term sustainable results (i.e. CSR) are not always as swift and effective as charity,
which is the form that is more common and familiar to the average citizen. While, importantly,
acknowledging the advantages of CSR and largely preferring it to simple Charity, still the
respondents see a combination of the two as an optimal company policy approach.

With regard to the current state of affairs with regard to Corporate Giving in Georgia, only
4% of the respondents believe that the Corporate Giving activities currently implemented by
Georgias private sector mostly include CSR projects. According to 32% of the respondents,
companies are by and large engaged with Charity and Philanthropy; 12% are convinced that
companies practice both forms of Corporate Giving. Notably, the proportion of the most
sceptical respondents who tend to think that businesses are not really implementing either of the
two is an astonishing 45%. In denying the private sector any credit for Corporate Charity, this
figure suggests that, since current Corporate Charities are not impersonal, this kind of corporate
giving shall not be considered charity. In more particular terms, this sceptical argument implies
that, except for rare cases, beneficiaries gain access to charity through their social networks and
peer or family contacts and, in most cases, company managers take decisions according to the
direct or indirect weight of the applicant within his/her (managers) social network.

A remarkable 45 -75% of the respondents could not give the names of companies that practice
particular areas of CSR, while the awareness of Corporate Charity and philanthropy is much
higher. At the same time, the proportion of the respondents who have heard of particular CSR
activities but cannot give the names of the companies involved is also significantly high.

The majority of respondents evidently recall charitable rather than CSR activities of
current corporate practice. This pattern suggests that charity and philanthropy as forms of
Corporate Giving are more common compared to CSR and that the awareness of any CSR
practiced by companies is low.

The gap between expectations and perceptions with regard to Corporate Giving is
significant; 99% of the respondents believe that companies should voluntarily undertake both
forms of Corporate Giving, while only 12% think that companies are actually doing so, and even

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less, 4%, suggest that companies mostly implement CSR projects. A simple comparison reveals
that the companies are implementing far fewer CSR projects and activities than expected by
society, and/or that public awareness of actually implemented CSR projects is low.

An inquiry into the particular structure of partnership between stakeholders in the process of
implementing CSR projects revealed the Models of Corporate Giving preferred by the Tbilisi
population. The Government, CSOs, other companies, and International Organizations were
identified as the stakeholders/potential partners of a CSR-sensitive company looking for optimal
conditions to implement a CSR project. According to respondents, it would be more efficient
and reliable for a company to use its own human and financial resources when implementing a
CSR project. This reflects a certain scepticism regarding partnership between several
stakeholders, whose involvement involves a perceived risk of delaying decisions and increasing
the costs of a project. This prevailing opinion may also reflect the attitude toward the role and
performance of the government and CSOs in possible or actual projects that fit the definition of
CSR.

Interestingly, despite the fact that the CSR concept is new to Georgian society and no significant
awareness campaign has been implemented, the study reveals an intuitive awareness and
appreciation of the entire argument for why a company must be motivated to practice CSR.
In the first instance, respondents identify such most tangible and pragmatic benefits as consumer
loyalty and improved public relations, followed by: Because business is using public resources
and has to voluntarily give back to the society/community; Because government has limited
resources to address all public needs; Taking care of employees will increase their loyalty; and
Better relations with the government.

Regarding the stimuli for CSR, a majority of the responses emphasize the decisive role of the
government in creating such stimuli: The government should introduce tax incentives for
companies that implement CSR (81%); The government should create a fund to finance social
projects through corporate donations (60%); The government should oblige business to
undertake CSR activities (51%). The demography of the responses is worth special attention. A
remarkable 89% of the individuals employed in the public sector, and 85% of those respondents
who work in the private sector, refer to tax incentives as the major stimuli for CSR. The lowest
occurrence of this answer was observed from the employees within the NGO sector. The
frequency of answers that suggest government action which in fact challenges the voluntary
character of CSR (The government should oblige business to undertake CSR activities and
The government should create a fund to finance social business through corporate donations)
is inversely proportional to the strength of the educational background of the respondents.

Awareness of the actual stimulus for CSR, which takes the form of tax exemption, proved to
be very low. Only 20% of the respondents had heard about the tax incentives for charity5.This
figure can be compared to awareness levels of other tax issues unrelated to CSR; for example,
30% for the recent reduction of income tax, and 26% awareness of tax exemption for individual
entrepreneurs.

As for the perception of current impediments to CSR, the top-down rating of the causes
named by the respondents includes: the selfishness of companies and a lack of initiative to
internalize responsible business practices; absence of particular incentives by the government for
CSR activities; problems in business-government relations; practicing CSR is not a natural

5 Georgian legislation provides an 8% profit tax exemption for the amount provided by companies to charitable

organizations.

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 function for businesses; CSR may have a counterproductive effect, that is, to inflate the
expectations of and demands on CSR-friendly companies, which may put them in a difficult
position; and the lack of funds.

Society is not sufficiently informed about companies and their responsible business practices,
while demand for information regarding Corporate Giving exceeds the current supply.
Respondents expect significantly more information to be available on particular aspects of
Corporate Giving in general and CSR in particular. A remarkable 45 -75% of the respondents
were unable to name companies that practice particular areas of CSR, while the awareness of
Corporate Charity and philanthropy is much higher. It can be surmised that companies are
unable satisfactorily to inform the public of CSR activities, which indicates the need to introduce
proper Social Reporting and effective dissemination of such reports through various media
channels and sources of information.

The difference between the ranking of the actual sources and media of information on the
private sector in terms of intensity of information flow and effective coverage, and the ranking
by the perceived trustworthiness of the sources and media is drastic. While the bulk of
information on the private sector is delivered via TV channels, followed by printed media and
word of mouth (ones peer contacts and social network) etc., the respondents trust word of
mouth sources more than any mass media. Surprisingly, despite relatively low access to the
Internet and the small amount of information available (11%), the second highest rating was
given to the Internet as a perceived more independent, impartial and complete source than any
other mass media. As for TV, the strongest media with 95% coverage rating, it was rated only
third from the top, together with printed media (32% coverage rating) and radio (12% coverage
rating).

Almost one half of the respondents (46%) consider the content and amount of information
on the private sector sufficient. However, more than half demand more information (current
information is more or less sufficient 22%; current information is not sufficient 24%; and
current information is not sufficient at all 7%). Importantly, the respondents strongly
suggested that secrecy and lack of corporate transparency and disclosure on the part of the
companies harms public confidence in the companies and that, since there are no watchdog
institutions and the information placed in the media is mostly positive, there is a broad sense of
lack of information that causes society to be inherently suspicious of companies.

The respondents were questioned regarding the required information on businesses. The
information gathered from the spontaneous answers is as follows: 40% of the population
demanded more information on the quality of products and services, that is, how the products
and services are produced; 20% on the history of the companies to ascertain whether the means
by a company becomes successful meets their (respondents) perceptions of fair play; 15% on
whether the company in focus is involved in Corporate Giving; 13% on the actual role in and
contribution of the company to the development of the country and society at large; 10% on
company practice with regard to employees, and only 6% on the environmental impact that
results from company operations. When ranking given answers, there was a high frequency of
such responses as involvement in Corporate Giving; the contribution of the company to the
development of the country and society; and the origin of production inputs (local or foreign)
(67%, 65% and 60% respectively).

According to the data generated by the study, there is a clear expectation and demand for more
information regarding CSR practices of companies as a part of Social Reporting or any form
of Reporting on Non-financial Activities. 66% believe that it is necessary that companies

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openly report their CSR activities to society at large, while 15% of the population see no need for
such information.

As for the sources and media of information on CSR, 90% would prefer television as the
major medium of information, while 43% would mostly rely on printed media. Remarkably,
despite the fact that the publication of annual social reports has yet to be introduced (currently
practiced by a handful of companies), 22% expect to learn about company CSR from annual
reports printed and placed on the Internet. 21% expect companies to place the relevant
information on their websites, 17% expect companies to include information in corporate
advertisement materials (booklets, brochures), 14% expects the information be somehow
attached to company products and services, and only 5% would prefer independent audit reports
as the best source of information.

II. METHODOLOGY OF THE STUDY

2.1 General Methodological Approach Local-context-specificity vs. Standard
Checklists
The overall objective of the CSR mapping study was to discover what local society knows about
CSR, how it prioritizes the areas of CSR, how it perceives the current state of affairs and how its
needs and expectations are to be met. Meeting these objectives required identifying the perceived
place of CSR within the broader context of Corporate Giving and even broader local discourse for
the role and place of the private sector in Georgian society and the process of its development.

The subject of the study (Responsible Business Practices/Corporate Social Responsibility) as it is

known in western corporate and developmental professional discourses, is new for Georgian
society. In the local context of a country like Georgia, categories of CSR that are common in
western professional discourse are hardly recognizable and often locally irrelevant; this was once
more confirmed by the current study. At the same time, it is true that an average Georgian is
proud of the traditions of philanthropy and the sense of responsibility of elites within broader
society that engenders particular forms of social solidarity the patterns that are perceived by
many Georgians as setting certain standards for their way of life. Nevertheless, CSR as a form of
Corporate Giving, as distinct from pure charity and philanthropy, is a product of a particular
place and time. In particular, CSR stems from the present day post-industrial discourse that has
been formed by a combination of a range of factors, including: current developmental discourse
in which the role of the private sector in development is emphasized; particular practices and
know-how developed relatively recently in western societies by enlightened, yet pragmatic,
business elites; certain patterns of consumer awareness and consumer behaviour; as well as the
activities of pressure groups that often monitor and modify the actions of large corporations.
These formative factors are either new or non-existent in the current local context of Georgia,
where a dynamically developing private sector is still young, patterns of consumer awareness and
consumer behaviour are hardly visible, and consumer pressure groups are not in place.

Sensitivity toward the factors that determine awareness, perceptions and expectations, which in
turn constitute the locality - the character of the discourse that is unique to the particular time and
place is a necessary precondition for mapping the issue area in a way that provides for practical
guidelines for action. A standard universal approach, which assumes a general similarity of the
factors that form perceptions and expectations elsewhere and suggests the simple copying of
methodologies and questionnaires, not only lacks the benefits of a context-specific approach but
often distorts the picture, and thus prevents useful conclusions from being drawn.

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 For this reason, as an optimal solution for extracting methodologically correct information
qualitatively adequate for analysis, it was decided to tailor the study to the particular local context
of Georgia as of 2007; that is, to inquire into the meanings of CSR - as well as the rankings of its
local legitimacy and the degree of its importance in the local agenda - within the local system of
meanings (to borrow an anthropological term), rather than short-sightedly and misleadingly
assume that these meanings are similar irrespective of place and time.

The advantages of this approach allowed the mapping of CSR perceptions and expectations of
local society - where the endeavour of building CSR awareness is in its infancy - by mapping the
local CSR discourse as it is. This is as opposed to a simplistic, technocratic, a-contextual and
ideologically presupposed inquiry into awareness of the particular imported categorizations
and logical constructs of what is essentially a foreign discourse.

2.2
2.1 Geographical Focus
80 % of the economic activity of the country is concentrated in the capital city of Tbilisi, where
25% of Georgias population lives. Also, the Study was the first of its kind ever conducted in
Georgia, and serves as a mould-breaking baseline study. Thus, in order to ensure the relatively
homogenous, yet diverse and representative character of the target group and to meet certain
organizational and budget constraints, it was decided to focus the baseline mapping study on the
population of Tbilisi.

2.3 Method and Instrument

2.2
Given the character of the research objective, a standard combination of qualitative (public
opinion survey) and quantitative (focus group discussion) methods was selected.

Focus Group discussions

Detailed information was retrieved through two focus group discussions. Moderated group
discussions provided a forum for open and detailed expression of individual attitudes, expression
of individual opinions on the attitudes and assessments expressed, and aggregation of the
expressed ideas.

Public Opinion Survey

The questionnaire and a guide for interviewers comprised a standard set of instruments applied
in the research.

2.4 Target Group Selection Focus Groups

2.3
Each of the two Focus Groups included 10 individuals of a mixed socio-economic profile but
selected upon Opinion Former (OF) criteria6. To ensure the representative nature of each group,
and at the same time to differentiate between the attitudes and expectations of individuals from
different social groups, additional criteria were applied. These included household income and type of
employment.

Focus Group 1 (FG 1) included low household income individuals (household income below
USD 500/month) and the unemployed, while FG 2 contained individuals whose household
income exceeded the equivalent of USD 500. Importantly, to ensure the representative character
of the groups, criteria also included a certain representation of individuals employed in the
private, public and NGO sectors.

6 Individuals who had been engaged in at least two activities out of the list of 12 within the previous 12 months were

selected.

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The duration of each focus group discussion was 2,5 hours. Discussions were recorded for
analysis. A moderator was provided with written instruction and content-specific training prior
to holding Focus Group Discussions.

The analysis was produced based on video and audio records as well as written transcripts of the
Focus Group Discussions.

2.5 Public Opinion Survey - Methodology, Technique and Instrument

2.4
The descriptive survey enabled the retrieval of quantitative data on selected indicators for
statistical grouping, comparison and analysis (variables, parameters, correlations etc.).

Technique and Instrument

The standard technique of face-to-face interviews based on a standard questionnaire was applied.
The majority of questions included in the questionnaire were closed questions. Open questions were
coded separately. Each interview (44 questions in total) lasted an average of 45-50 minutes.

Pre-test (Pilot Survey)

In order to fine-tune the questionnaire and interview technique prior to conducting the full-scale
survey, a Pilot Survey of 15 interviews was undertaken by four professional interviewers
specifically trained in the technique of conducting pilot surveys. After each interview a special
form for comments and observations was completed by the interviewers. The final version of
the survey questionnaire was prepared based on these comments.

Target Group Selection

The survey targeted 700 respondents over 18 years of age. Given the objectives of the study,
representative sampling7 was considered the optimal choice. The research design applied
provides for a 95% confidence level for 50% variable. Maximum sampling error is 4.0, and the
design allows the respondents to be categorised by age and gender profiles.

To ensure credibility of analysis and conclusions, the data retrieved through field research was
statistically weighted according to the statistical profile of the Tbilisi population (e.g. distribution
by age and gender)

In addition, the respondents were selected randomly through a four step technique:

Step 1: The number of the respondents was allocated to each of the 5 administrative districts of
Tbilisi according to the relevant share of the population over 18 years of age in the district.

Step 2: Every district was divided into clusters - square areas of similar size, and the number of
interviews determined for the particular district was evenly allocated to each cluster.
Subsequently, the number of interviews was evenly distributed among the clusters.

Step 3: In each selected cluster, the three most distant points were selected as the starting points
for the interviewers. Every first interview was held in the residential building/house closest to
the starting point. Every next point was selected according to a standard predetermined step size
e.g. every fifth private house, every third apartment building, three families in each entry, the
first, middle and last floors in every third entry into a multi-story apartment building etc.

7 Representativeness the degree to which a sample of the study represents the characteristics of the population as a whole. In case of this study,
group composition reflected the socio-economic and demographic parameters of the Tbilisi population.

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15
 Step 4: Within every household approached, the respondent was selected according to the last
birth date principle.

Call back procedure

According to the instruction, if the respondent was unavailable, the interviewer would make
three repeated attempts to contact her/him. In the case of failure to reach the respondent or
refusal on her/his part to be interviewed, the interview was filed as cancelled and the
respondent substituted by a new one selected according to the standard selection criteria outlined
above.

Quality Control of the Field Research

Several procedures were applied to ensure quality control. The Monitoring Group verified 20-
25% of the interviews conducted via telephone and site visits. All completed questionnaires were
checked before entry into the statistical database. The outcome of the quality control activities is
documented in the technical report of the study.

Research Data Processing

The data retrieved through the Survey was processed with professional SPSS 15.0 statistical
software. The report of the survey was prepared based on the statistical analysis.

III. THE ROLE AND PLACE OF BUSINESS IN SOCIETY PERCEPTIONS

AND EXPECTATIONS

Awareness of the current attitude and expectations of the general public toward business is
essential in understanding the local context for CSR. As in many post communist countries, the
private sector is relatively young in Georgia. The modes of its interaction with government
institutions, NGOs and society at large evolved dynamically throughout the period of dramatic
socio-political and economic transformations of recent Georgian history, which drove the
private sector into the shadow economy and back again, as well as through different modalities
of business-government relations and various forms of social solidarity. There is almost no
information available on public attitudes toward business, an issue that has not been studied.
Public attitudes toward business have dynamically evolved through social, economic and political
turmoil.

The current study addressed the issue through an inquiry into the publicly perceived place of the
private sector in society (i.e. its position with regard to institutions and society) as an entry point
into mapping attitudes and expectations of the society toward businesses.

3.1 The Role of the Private Sector in Development

The inquiry into the role of business in development; that is, in the betterment of the human
condition, revealed that the pool of respondents fell into three more or less equal parts. 37% of
the population believe that business is definitely playing an important role in the development
and progress of society; for 35%, this role is largely/more or less important, while a significant
number, 28%, do not consider this role important at all. (See Chart 1. below)

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16
Chart 1.: Perception of the Role of Business in Development.

The role of The role of

business is not business is
important; 28% Undecided; 1% important; 37%

The role of
business is more
or less important;
35%

3.2 Positioning of the Private Sector Relative to Society and Institutions

Overall public attitude toward the private sector provides a broad perspective of the local
context within which the perceptions and expectations toward Responsible Business
Practices/CSR are being formed. This interesting issue was addressed in both Focus Group
Discussions and the Public Opinion Survey. Participants of the Focus Group Discussions
identified four major institutional players: the government, the private sector, civil society and
international organizations.

Focus Group discussions inquired into the position of the private sector within the existing
institutional framework and, importantly, the proximity8 of the private sector to the core of society
compared with other institutions (as perceived by the respondents). The participants of the
discussion were invited to depict the positions of the institutional sectors (government, private
sector, civil society organizations and international organizations) with regard to the core of
society and public interest by placing the labels of institutional sectors onto a dartboard. In this
society-centric model, the core of society, i.e. general public interest - was placed in the centre of
the circle.

Positioning of the Private Sector and its proximity to the core of society
Focus group discussions based on the dartboard projection technique revealed that the Private
Sector was considered the closest to the core society followed consecutively by Government,
Civil Society Organizations and International Organizations.

What determined the ranking of the institutional sectors as suggested by the respondents? The
private sector was given the closest position to the core of society firstly because of the
frequency of immediate contact of practically every citizen with multiple private sector players;
citizens as consumers buy products and services on a daily basis.

8 In this case proximity shall be understood as perception and expectation toward an institutional sector to

meet/satisfy/take into consideration broad public interest and demand.

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17
 Everything we buy is made by companies, and we do it every single day. (FG 1.: Woman. Age: 41.
Unemployed)

Business is the closest to the masses [of citizens] because, in one way or another, everybody with no
exception has daily contact with it. The same is not true for the government, NGOs and moreover
International Organizations (F.G. 2: man. Age 32. Employed in NGO Sector)

Secondly, private business was considered the closest ally of the core of society inasmuch as the
respondents consider the private sector a guarantor of economic wealth and stability for every
citizen with no exception.

Whether one likes it or not, business is the driving force the major structural item of capitalist
economy, initiative and social action. Isnt that right? (FG 1. Man.Age45. Unemployed)

The reflections of the discussion participants, and the pace of discussion, revealed a strong pro-
market attitude within Georgian society, which seems to remain the mainstream attitude despite
socio-economic problems.

Government and society

Quite expectedly, the major rationale for the proximity of government to society, as perceived by
the respondents, is related to the regulatory function of government institutions, taxation and the
provision of municipal services. Nevertheless, interestingly, a significant part of the respondents
from both Focus Groups consistently presented the government and, subsequently, the
interaction of a regular citizen with the government, as a necessary evil an involuntary choice
that has no feasible alternative. At the same time, the same portion of the respondents pointed
out that they feel closer to the private sector than the government per se.

Well, yes, we all pay taxes also, legislation and gas supply [is taken care of by state] this is by
and large what links us with the government ( F. G. 1. Man. Age 36. Unemployed)

It is not about how frequent are ones contacts with government. You are in contact with the government
when you turn on the light at home or enjoy the street lights, for instance, but [frequency of] contact is one
thing how close it is to you is something different (F.G. 2. Man. Age 36. Employed in the private
sector.)

Id rather deal with a business company and have a sufficient income so that I dont have to deal with the
state at all. It is good when people stay away from the government and politics. In the West, ordinary people
have little interest in government and politics and little contact with government. (F.G. 2. Man. Age: 36.
Employed in private sector.)

CSOs and International organizations ranked after the private sector and government. According
to the respondents, these two institutional sectors have relatively little direct contact with society.
The respondents indicated little public awareness of the goals and activities of International
Organizations, while at the same time the help they provide to the government was
acknowledged. Possible conflict of national and international bureaucratic interest was another
issue raised with regard to International Organizations in Georgia.

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18
Somewhat conflicting assessments were given to the CSO sector. On the one hand, respondents
Somewhattrust
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CSOs as institutions to are,
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IV. THE ROLE OF BUSINESS IN DEVELOPMENT AND THELOCAL

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AS A VOLUNTARY CHOICE AND
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regard.
findings in this regard.
4.1. Factors that Determine the Success of a Private Business Enterprise Public
4.1. Factors that Determine the Success of a Private Business Enterprise Public
Perceptions
Perceptions
Perceived factors of success of private enterprises were investigated by the study in order to
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determine of success
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good company the government;
reputation/image competent
within society.employees;
Chart 2 below
foreign investment; and good company reputation/image
depicts the percentage ranking of the factors of success. within society. Chart 2 below
depicts the percentage ranking of the factors of success.

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 Chart 2. The Factors that determine the success of a private business enterprise9(%, spontaneous answers10)

Government support within the legal framework 33%

Quality of products and services provided to the consumers 30%
Influential shareholders 18%
Strong influential lobbyists in the government 16%
Competent employees 10%
Foreign investment 9%
Good company reputation/image with the society 7%
Other factors 10%
Undecided 11%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Note: Other factors include: the economic situation in the country; reduction of corruption; change in government
in 2003; access to export markets; an independent judicial system; reliable partners; advertisement; political
stability; conducive business legislation; good management and financial strength.

For spontaneous answers, government support within the legal framework was considered the
most important factor. Two Responsible Business Practices/CSR related factors: quality of
products and services provided to the consumers and good company reputation/image with
the society rank number 2 (30%) and number 7 (7%) respectively.

As for rankings, quality of products and services provided to the consumers ranked above all
other factors, followed by government support within the legal framework. While good
company reputation/image with the society was ranked number 7 (See Table 1. below)

Table 1.: The Factors that determine success of a private business enterprise (ranking)

1 Quality of products and services provided to the consumers

2 Government support within the legal framework

3 Influential shareholders

4 Strong influential lobbyists in the government

5 Competent employees

6 Foreign investment

7 Good company reputation/image within the society

9 The data refers to the entire sample size (N=700)

10 The answers that address open questions without any help by an interviewer or moderator i.e. optional answers, or direct or
indirect guidance
12 The sum of the percentage rates for the spontaneous answers is not equal to 100%, as the respondents were allowed to

provide multiple answers.

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Respondents assigned top priority to government support within the legal framework as well
as quality of products and services provided to the consumers. According to the respondents,
at this stage of economic development, growth of the private sector and, accordingly, the
economy, strongly depends on government support in removing impediments and creating a
favourable business environment. The top ranking of quality of products and services provided
by a relatively young private sector operating in a strongly deregulated environment (e.g. no food
safety regulatory body, low environmental requirements, and employer-oriented labour
legislation) is quite understandable. Interestingly, respondents (i.e. consumers) considered good
company reputation/image within the society to be overpowered by such factors as influential
shareholders; strong influential lobbyists in the government; competent employees; and
foreign investment. This can be explained by an interplay of such perceptions and trends as:
still low (yet increasing) trust toward impersonal institutions and the perception of a thin line
between political power and business; a high relative weight of government contracts and
privatization in overall economic transactions; a decreasing, yet considerable deficit in
professional resources; relatively low access to capital and perceived advantages of foreign
investment compared to local capital; and, finally, low consumer awareness and consumer
solidarity based on certain forms of consumer awareness.

A comparison of rankings for quality of products and services provided to the consumers
(rated no 1, 33%) and competent employees (ranked no 5, 10%) is interesting in itself, as it
indicates the relatively low degree to which the respondents perceive the factor of competence of
the employees affecting the quality of products and services.

In order to avoid arriving at guided feedback of the respondents, the research technique (open
ended questions) required listing, categorization and phrasing relevant factors by the respondents
themselves. The purpose of this exercise was to inquire whether the factors directly relevant to
CSR discourse would be identified, i.e. whether CSR categories are a part of the discourse for
local society. That the categorization put forth by the respondents often didnt include direct
references to the aspects and forms of Responsible Business Practices/CSR is an important
finding in itself, inasmuch that it may suggest that CSR as it is known in societies where
consumer awareness, consumer pressure groups and watchdog institutions have been a part of
social reality for quite some time, and purely in pragmatic terms of maximizing profit, CSR has
been an integral part of corporate policy, management and public relations. Since none of these
determining factors are in place in Georgia, it would have been nave to expect an average
Georgian to identify CSR in terms of Western European or North American CSR discourse.

Yet, given the specifics of the current state of affairs within the private sector in Georgia, two
factors identified quality of products and services provided to the consumers and good
company reputation/image within the society- are indirectly linked to the philosophy of
Corporate Responsibility. Quality of products and services provided to the consumers is a
broad definition, and relevant to CSR mapping to the extent that private sector players operating
in the current deregulated business environment have relatively low standards for product and
service quality requirements. Thus, it can be surmised that the provision of safe quality products
and services is often perceived as a matter of the moral choice of enlightened business leaders
even at the cost of a decrease in profits. Whereas Good company reputation/image within the
society can be directly linked to an ability to meet public demand and expectations for different

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 forms of social solidarity, responding to the needs of local communities, and, as a minimum, a
do no harm approach toward environmental protection.

Due to their vague links to the essential aspects of CSR, the findings outlined in this section
must be seen as complementary to the major findings on the formative factors of public attitude
toward the private sector, provided in section 4.2 below.

4.2 What Factors Form Current Public Attitude toward the Private Sector?
Spontaneous answers to the open questions of the survey questionnaire revealed the set of
factors that determine public attitude toward companies, and, subsequently, the relative weight
of each factor. The set of relevant factors identified by the respondents are given here as direct
quotes: quality of products and services provided to the consumers; employing locals as
opposed to importing an inexpensive workforce from abroad; good publicity and public
relations; competence/professionalism of the company employees/managers; taking care of
own employees/good corporate welfare; using local production inputs/raw materials as
opposed to imports; charitable projects funded and implemented by companies/corporate
philanthropy; personal reputation of a CEO as an honest and decent member of the
community; honesty toward shareholders and suppliers; corporate transparency; paying all
taxes; the company is based on foreign investment/or is a subsidiary of a foreign company;
the company applies new technologies and transfers advanced technological know-how to
Georgia; and taking care of the environment.

Table 2 represents the percentage and rankings of the above factors in the survey.

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Table 2.: The factors that determine the reputation of a company (spontaneous listing12 and ranking)

Factor Spontaneous Ranking

Answers

Quality of products and services provided to the consumers 62% 1

Employing locals as opposed to importing an inexpensive workforce from abroad 26% 2

Good publicity and public relations 19% 7

Competence/professionalism of the company employees/managers 14% 3

Taking care of own employees/good corporate welfare 10% 4

Charitable projects funded and implemented by companies/corporate philanthropy 9% 11

Using local production inputs/raw materials as opposed to imports 9% 5

Personal reputation of a CEO as an honest and decent member of community 8% 8

Honesty toward shareholders and suppliers 6% 10

Corporate transparency 5% 9

Paying all taxes 4% 6

Company is based on foreign investment/or is a subsidiary of a foreign company 4% 14

Company applies new technologies and transfers advanced technological know-how to

Georgia 4% 12

Taking care of the environment 2% 13

Undecided 11%

Other Factors13 2%

In addition to spontaneous answers to open-ended questions in the Survey and the ranking of
factors from the suggested list, focus group participants were asked to list parameters for a
virtual ideal company, as well as to provide a subjective perspective through identifying the
most respected companies and explaining why she/he respects the company named.

Quality of products and services provided to the consumers

13 Other Factors referred to spontaneously by the respondents include: low, acceptable prices for products and services; relevance of price to
the quality of products and services; financial strength of the company; and good relations with the government.

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 factors from the suggested list, focus group participants were asked to list parameters for a
virtual ideal company, as well as to provide a subjective perspective through identifying the
most respected companies and explaining why she/he respects the company named.

Quality of products and services provided to the consumers

In terms of both the frequency of responses and ranking, Quality of products and services provided to
the consumers was considered the most important factor determining company reputation. 62% of
the respondents referred to this parameter and the majority ranked it number 1 in the list.
13 Other Factors referred to spontaneously by the respondents include: low, acceptable prices for products and services; relevance of price to
the quality of products and services; financial strength of the company; and good relations with the government.
An ideal company should respond to consumer demand and meet public interest whether it is required by
law or not. (F.G. 2. Woman. Age 32. Employed in Public Sector)
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Employing locals as opposed to importing an inexpensive workforce from abroad
Providing employment to local communities was ranked number 2 in the factors determining
company reputation, and amounted to 26% of the frequency of response. The feedback of the
focus group participants indicates frustration with unemployment and the tendency of hiring
foreigners for positions that could have been filled by locals.

The way it normally happens is that a foreigner who is no more qualified than a local, is given a 5,000
Euro job a Georgian is paid 500 Georgian Lari for the same work and has to be thankful, timid and
take all the injustice with gratitude and a smile (F.G. 2.Woman. Age 32. Employed by a CSO)

Good publicity and public relations/taking into account consumer opinion

Publicity and public relations was named by 19% of the respondents but, in terms of ranking, it
finished in seventh place out of fourteen. Noticeably, this factor was not identified in the
qualitative part of the study as an attribute of a virtual ideal company. In spontaneously
provided feedback on the factors that make a good company, 10% of the respondents
identified taking into account consumer opinion. In terms of percentage shares this was the
fifth most important factor in the list.

Competence/professionalism of the company employees/managers

The professional level of the employees was ranked number three (10% of the respondents) and
was identified as an attribute of an ideal company. Quite expectedly, the quality of managers
and customer relations specialists was given particular importance; it was emphasized that
competent managers are more likely to take into consideration public interest, and respondents
identified a link between the competence of management and employees, and good corporate
welfare.

Taking care of own employees/good corporate welfare

This factor was ranked as the fourth most important. The data of the study suggests that social
responsibility toward employees is an issue given high importance by the respondents and,
subsequently, was also ranked high (13%) in the set of factors that make an ideal company (see
Table 3. below).

Using local production inputs/raw materials as opposed to imports

Using local production inputs, to quote the respondents, or building local supply chains in
more professional terminology, ranks after employee-friendly policies and practices (ranking
fifth; 9%). In addition to the moral value of supporting particular communities through choosing

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local production inputs, the respondents generally emphasized the long-term gains that may
often come as a reward for this voluntary choice.

Charitable projects funded and implemented by companies/corporate philanthropy

It must be emphasized that the definition of Charitable projects funded and implemented by
companies/corporate philanthropy in the local discourse shared by the respondents goes beyond the
division into philanthropy and social investment that is common in the professional world of
managers and promoters of CSR. In the local discourse, the connotation of corporate charity
rather includes both; it implies corporate spending in areas other than promotion and
advertisement and other than commercial investment aimed at immediate or short-term profits.
Yet the objective of the study attempted to inquire more into how the respondents differentiated
between assessed social investment and charity. In this regard, the study proved that, since CSR
is a relatively new concept in Georgia, not only is social investment not clearly separated from
corporate charity, but the term is not publicly used. This important circumstance was taken into
account, and specific techniques were applied, both in the design of the questionnaire and in the
instructions given to group discussion moderators, in order to distinguish between CSR-related
social investments and corporate philanthropy in the feedback provided by the respondents. The
respondents were asked to give a categorized list of common relevant corporate practices known
to the local public. Thus, this analysis is based on the local connotation of the term that includes
both social investment and charity, yet in a way that allows for differentiating social investment
from charity.

In the listing of factors that determine the reputation of a company, Charitable projects funded and
implemented by companies/corporate philanthropy, including social investment, was ranked number
eleven and was cited by 9% (the sixth largest percentage share) of the respondents of the Survey.
However, Focus Group Discussion participants defined it as an indispensable attribute of an
ideal company it ranked number two in the listing (28%) after the quality of products and
services (see Table 3 below). The name of a local company that was first to introduce corporate
charity, including a substantial package of social investment, and has, perhaps, remained the
largest charitable corporate player for almost ten years, was cited most frequently by the
respondents when asked to name good companies.

Taking care of the environment

Although protection of the environment was identified among the three factors that form
expectations and attitudes toward business in Georgia (see 4.5 and 4.6 below), in a more detailed
inquiry of factors that form company reputation, as well as in the inquiry into the reasons for
referring to particular good companies, this factor was ranked second from the bottom of the
list (ranking thirteenth, 2%, for factors that determine reputation and 0,4% for the strengths of
good companies nominated). This can be explained by several major issues; the relative
scarcity and scant publicity of responsible business practices aimed at the environment, relatively
low environmental awareness, and a generally low ranking of environmental issues in local
discourse compared to socio-economic problems.

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25
 The study of CSR, conducted by CSRDG among the managers of big business companies, 14
reveals that the majority of managers are convinced that environmental issues should be
considered only by those companies that affect the environment by the nature of their
operations.

Other philanthropy, social investment and CSR-related factors

In spontaneous answers for the determinants of a good company,15 the respondents identified
several categories that are related to philanthropy, social investment and CSR in general. In
particular, this includes Taking care of/sponsoring culture and art; Supports the exploration of talent and
creative potential among the youth/youth education; Taking care of the city/investing in the improvement of the
urban environment; and Applying international standards in operations (see Table 3). The aggregate
weight of these factors is 2,6%.

Table 3: The factors that determine the good reputation of the particular good companies referred to by the
respondents.
Factor referred to spontaneously by the respondents % share

Quality of products and services provided to the consumers 37%

Charitable projects funded and implemented by companies/corporate philanthropy 28%

Competence/professionalism of the company employees/managers 14%

Employing locals as opposed to importing an inexpensive workforce from abroad 13%

Taking into account consumer opinion 10%

Personal reputation of a CEO as an honest and decent member of the community 8%

Fair, acceptable and affordable prices 7%

Taking care of own employees/good corporate welfare 5%

Good publicity and public relations 5%

Corporate transparency/providing society with correct information 5%

Using local production inputs/raw materials as opposed to imports 4%

Environmentally clean products 2%

Good management 1%

14 Big Business in Tbilisi and Corporate Social Responsibility Attitudes and Practice, CSRDG, 2007 (in
preparation for publication)
15 Unlike the data provided in Table 2 above, which represents the frequency of answers (the sum of responses is

over 100%), in the case of data given in Table 3, the respondents were required to provide a single answer (thus the
sum of % rates of responses is 100%)

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26
Makes a tangible contribution to economic development 1%
Makes
Makes aa tangible
tangible contribution
contribution to to economic
economic development
development 1%
1%
Takes care of/sponsors culture and art 1%
Takes
Takes care
care of/sponsors
of/sponsors culture
culture and
and art
art 1%
1%
Supports the exploration of talent and creative potential among the youth/supporting youth education 1%
Supports
Supports the
the exploration
exploration of of talent
talent and
and creative
creative potential
potential among
among the
the youth/supporting
youth/supporting youth
youth education
education 1%
1%
Takes care of the environment 0.4%
Takes
Takes care
care of
of the
the environment
environment 0.4%
0.4%
Takes care of the city/invests in the improvement of urban environment 0.4%
Takes
Takes care
care of
of the
the city/invests
city/invests in
in the
the improvement
improvement of of urban
urban environment
environment 0.4%
0.4%
Is not involved in politics 0.4%
Is
Is not
not involved
involved inin politics
politics 0.4%
0.4%
Has a foreign investor as a partner/owner 0.3%
Has
Has aa foreign
foreign investor
investor asas aa partner/owner
partner/owner 0.3%
0.3%
Applies international standards in operations 0.2%
Applies
Applies international
international standards
standards in in operations
operations 0.2%
0.2%
Undecided 3%
Undecided
Undecided 3%
3%
Other Factors 13,7%
Other
Other Factors
Factors 13,7%
13,7%

4.3 General Attitude toward Responsible Business Practices/CSR as a Legitimate

4.3
4.3 General
General Attitude
Attitude toward Responsible
Responsible Business
Business Practices/CSR
Practices/CSR as as aa Legitimate
Voluntary Choicetoward
for Businesses Legitimate
Voluntary
Voluntary Choice
Choice for Businesses
The Public Opinion Survey andfor Businesses
Focus Group Discussion alike indicate that respondents expect
The
The Public Opinion Survey and Focus Group Discussion alike indicate that respondents expect
big companies, rather than SMEs, to beGroup
Public Opinion Survey and Focus active Discussion
CSR players.alikeAs indicate
many as that
93%respondents expect
of the respondents
big
big companies, rather
companies,that,
rather than SMEs, to be active CSR players. As many as 93% of the respondents
are convinced in than SMEs,
addition to be
to the activeobjective
primary CSR players. As many asprofit
of maximizing 93% andof the respondents
conforming to
are
are convinced
convinced that,
that, in
in addition
addition to
to the
the primary
primary objective
objective of
of maximizing
maximizing profit
profit and
and conforming
conforming to
to
current legal requirements, companies other than SMEs should assume a voluntary responsibility
current
current legal requirements,
legal requirements, companies other than SMEs should assume a voluntary responsibility
for addressing the needs of companies
society, andother than
should SMEs
also take should assumedevelopmental
into account a voluntary responsibility
for addressing
for addressing the needs of society, and should also take into account developmental
implications in the
the needs
process of of
society, andmaking
decision shouldand
alsointake into account
current businessdevelopmental
operations. The
implications in the
implicationsofinthose process
the process of decision
of decision making and in current business operations. The
proportion who believe that itmaking andbusiness
is not the in current business to
of business operations.
be guidedThe by
proportion
proportion of
of those
those who
who believe
believe that
that it
it is
is not
not the
the business
business of
of business
business to
to be
be guided
guided by
by
developmental agendas, and that companies should adhere only to their legitimate concern of
developmental
developmental agendas,
agendas, and
and that
that companies
companies should
should adhere
adhere only
only to
to their
their legitimate
legitimate concern
concern of
of
making profit, is 7%. (See Chart 3 below).
making profit, is 7%. (See Chart 3 below).
making profit, is 7%. (See Chart 3 below).
Chart 3.: Attitude toward CSR as a legitimate voluntary choice for the private sector
Chart
Chart 3.:
3.: Attitude
Attitude toward
toward CSR
CSR as
as aa legitimate
legitimate voluntary
voluntary choice
choice for
for the
the private
private sector
sector

CSR is a voluntary obligation

CSR is a voluntary
that should obligation
be assumed by 93%
CSR is a voluntary obligation
that should be assumed
businesses by 93%
that should be assumed by 93%
businesses
businesses

CSR is not the business of

CSR is not the business of 7%
business
CSR companies
is not the business of 7%
business companies 7%
business companies

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The respondents regard charity and philanthropy as the more common forms of corporate
The
The respondents
respondents regard
regard charity and
and philanthropy
charitysolidarity
philanthropy as
as the
the more common
common forms
moreself-interest
forms of corporate
behaviour, informed by social and the enlightened of theofcompanies,
corporate and
behaviour,
behaviour, informed
informed by social solidarity
by socialthe
solidarity and
and the enlightened
the enlightened self-interest
self-interest of the
of the companies, and
as the means for addressing needs of economically vulnerable groups a companies,
priority thatand
as
as the
the means
means for
for addressing
addressing the
the needs
needs ofof economically
economically vulnerable
vulnerable groups
groups aa priority
priority that
that
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5:10:53 PM10/16/2007 27
 ranked number one in the set. Such an approach may have resulted from a combination of
several factors: socio-economic problems are at the top of the current agenda; there is little
awareness of social investment as an alternative to charity; and clear-cut social investment
practices are relatively rare and poorly publicised. It is true that the respondents do not clearly
differentiate between charity and social investment. However, the respondents still generally
identify social investment better targeted charity to quote a respondent - as a preferable way
of doing what, in their perception and discourse, is corporate charity. This folk tradition logic
suggested by the respondents teaching the local community, which is related to, or located in,
the area of operation of a company, how to fish rather than give them fish falls under the
professional definition of CSR.

It would be great if businessmen had been doing targeted charity say, provide a village with tools or
seeds. The villagers would then at least produce the food they need. I have no idea why they [businessmen]
are not doing it this way. (F.G. 1: Man. Age 42. Unemployed)

In general terms, there was a consensus among the respondents that CSR activities will certainly
win good reputation with the entire society, in a definitely cost-effective way.

I think that a company which takes care of the environment and implements social projects will
definitely win maximum consumer loyalty at a minimal cost (F.G.1. Woman. Age 39. Unemployed)

The overall public attitude is overwhelmingly pro-CSR. The demanded areas and forms of CSR,
as well as perceived motives for practicing social responsibility, are addressed in detail in chapters
V., VI., and VII. below.

The percentage of sceptics towards CSR as a generally legitimate public expectation toward the
private sector is low, yet the logic of their line of reasoning is worthy of attention. In total, three
specific arguments were put forth.

It is up to the government to take care of development it is not the business of

businesses a part of the respondents and focus group participants assign the responsibility
for the aspects of development solely to the government as the major prerogative and function
of the latter, and see no reason why private enterprises should be preoccupied with addressing
public demands and expectations.

It is the government who is obliged by law to take care of all these. What else is the purpose of
government?... as for business... business should concentrate on its purpose make profit and not hide
money [from tax authorities] (FG 2. Man. Age 32. Employed in CSO sector)

Now, suppose a company doesnt break the law and pays all its taxes that are later spent for public
needs why should one expect more? (FG 1.: Woman. Age 38. Unemployed)

Its hard enough to survive and do business; its even harder for a company to take on
additional obligations and responsibilities - a certain proportion of the respondents does
not reject the CSR argument per se but argues that the business sector is still weak, being
challenged by high risks and uncertainties, and the overall business environment in Georgia
requires more improvement. According to this argument, expecting and even demanding CSR
from strong companies operating in wealthy and stable economies is just and fair. However, it is

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28
not fair to apply the same standards to the private sector in a developing country like Georgia.
Such additional requirements as CSR may even reduce the viability and competitiveness of
Georgian companies.

The taxes a businessman has to pay are already high and hard to afford. On top of that, other costs,
like the costs of energy are high and even increasing. All this is strangling ones business... So, shall we
require them [entrepreneurs] to do more than what they try to do? (F.G. 2. Woman. Age 34. CSO
Sector)

...Look, for instance, foresters do not re-plant forests any more, so why should businesses be obliged to
the job of the foresters? If a businessman does no harm, why should he do more? Should he take care of
his business in his spare time then? (F.G. 1. Man. Age:325. Unemployed)

Business is about pragmatism. It is guided by the logic of pragmatism. Any step beyond pragmatism
leads to defeat in competition with others. Only those businesses that are strong and confident can take on
additional obligations. There are not too many of them around though. (F.G. 1. Man. Age: 45.
Unemployed)

The more a business does voluntarily [in addition to requirements by law], the more it
will be demanded to do This argument, put forth by yet another faction of sceptics,
indicates the perceived lack of balance within business-government relations, and the threat of
CSR activities to inflate expectations of, and demands on business, on the part of the
government.

Business should do no more than abide by the law and fulfil legal requirements. Doing more will only
produce additional demands. (F.G. 2. Woman. Age 35. Employed in public sector)

4.4 Priority Areas of CSR as Perceived by the Respondents

Participants of the Focus Group discussions and respondents of the survey outlined the role of
the private sector in development, which they perceive as relevant to the discourse of Georgian
society. This included supporting economic development; addressing social and socio-
economic problems of society and protecting the environment (see V. Most Demanded Areas
for CSR below for the delineation of locally legitimate areas of CSR). Focus Group Discussions
as well as spontaneous answers to open-ended questions revealed that respondents identify and
categorize five major players in development, including private-sector players: the government;
big business; small and medium enterprises (SMEs); Civil Society Organizations (CSOs) and
International Organizations.

Importantly, the Tbilisi population does not see the relevance of some of the major areas of CSR
that are consensually considered as such internationally. As categorised by the Global Compact
Initiative, the largest worldwide CSR initiative championed by the UN,16 these include Human
Rights, Labour and Anti-Corruption. It would be too simplistic and simply incorrect to assume that

16 Visit www.unglobalcompact.org or www.globalcompact.ge for more information on Global Compact Initiative

worldwide and in Georgia.

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 these three important dimensions of CSR are not regarded by Tbilisi residents as a part of CSR
discourse because they lack basic awareness or deny the importance of Human and Labour
Rights and the need for company operations that reduce, if not eliminate, corrupt practices. The
fact of the matter is that, importantly, the respondents regard protection of Human Rights and
Labour Rights, as well as restraint from Corruption, as mandatory legal requirements to be
strictly followed, as opposed to a voluntary ethical choice of enlightened managers who claim
a higher moral ground. The Law clearly bans violation of Human rights and the use of Child and
Slave Labour, and there is little, if anything, that can be done voluntarily in addition to legal
requirements. Thus, in terms of determining the primary actor responsible for ensuring Human
Rights and Anti-Corruption policies and practices, the respondents clearly perceive government
rather than business as the institutional body in charge.

As for the absence of Anti-corruption, two more specific explanations can be suggested. Firstly,
it can be assumed that this factor was not considered by society as an area of responsibility of the
private sector players, since the problem of corruption has been traditionally understood as
corrupt practices set up and driven by government officials, not the lobbyists and managers of
businesses - these latter who may, in fact, have offered bribes to officials. Secondly, whilst not to
suggest that tax evasion has been totally eradicated on a nationwide scale, there have been
dramatic improvements in combating tax evasion by companies in Georgia; fiscal agencies now
identify corporate tax evasion, severe penalties have been applied and the cases broadly
publicized.

Labour Rights are not on the list of priorities, notwithstanding the fact that Georgias Labour
Code is essentially employer-oriented and offers little protection to employees, as a result of the
combination of a high rate of unemployment and poverty and the weakness of Trade Unions.
Demand for jobs is much higher than the supply of employment, and bargaining power and
expectations for an elaborate system of Labour Rights are simply not in place. In addition, there
are no reported cases of slave labour or extensive use of child labour by companies. Given the
current scope and scale of socio-economic problems in Georgia, the respondents may be
somewhat tolerant of child labour in rural household economies and rural and urban small trade
sectors.

4.5 Public Expectations of the Role of the Private Sector in Development

Methodological disclaimer
While
While considering
considering the
the data
data for
for Attitudes
Attitudes and
and Expectations
Expectations forfor the
the involvement
involvement of the private
of the private sector
sector and
and
other major institutional sectors in supporting economic development; addressing
other major institutional sectors in supporting economic development; addressing social and socio-social and socio-
economic problems of society and protecting the environment (see Charts 4, 5, 6, 8, 9 and 10) the
economic
areas problems ofrelevant
of development societytoand
theprotecting theidentified
private sector environment (see Charts 4,
and categorized by5,the6, respondents
8, 9 and 10) it
theis
areas of development
important to take into relevant
account to the private sector
methodological identified
restrictions onand categorized In
generalization. byparticular,
the respondents
since theit is
important towere
respondents take questioned
into accountregarding
methodological
the degreerestrictions
of perceivedon generalization. In particular,ofthe
and expected involvement the major
institutional
respondents players in the relevant
were questioned areas the
regarding anddegree
comparison of theand
of perceived data for different
expected players of
involvement maythenot be
major
credible
institutional players in the relevant areas.

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30
Charts 4, 5 and 6 below illustrate the expectation of society toward the major players in
development in respect of contributions to supporting economic development; addressing
social and socio-economic problems of society and protecting the environment the areas of
development relevant to the private sector identified and categorized by the respondents.

As a major conclusion it can be seen that there is a high demand for all institutional players,
except SMEs, to play a role in development.

Chart 4.: Expectations toward major players in the area of supporting economic development

120
97%
100 91%

80 68% 68%
53%
60
34%
40 24% 24%
8% 13% 8%
20 2% 7%
1% 0% 0% 0% 1% 0% 1%
0

"Big Business" SMEs Government Int'l Organizations CSOs Society

Has no obligation
Should largely/more or less take care
Should take care
Undecided

Chart 5.: Expectations toward major players in the area of addressing social and socio-economic problems of
society

120
98%
100 87%
72% 74%
80
54%
60
35%
40 21% 22%
20 10% 11% 6%
2% 0% 0% 0% 1% 0% 1% 4% 1%
0
"Big Bisiness" SMEs Government Int'l Organizations CSOs

Has no nobligation
Should largely/more or less take care
Should take care
Undecided

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31
 Chart 6.: Expectations toward major players in the area of protecting the environment

120
98%
100 90%
80% 82%
75%
80

60
40
20% 16% 15%
20 8% 5%
1% 0% 0% 2% 0% 4% 0% 2% 1%
0
"Big business" SMEs Government Int'l Organizations CSOs

Has no obligation
Should largely/more or less care
Should take care
Undecided

An overwhelming majority of respondents consider that big business is almost as much

responsible for economic development as the government; 91% and 97% of respondents
respectively. The differential between the responsibility for addressing social and socio-
economic problems of society is slightly higher; government - 98%, big business 87%. As
for protecting the environment the government to big business ratio is 98% to 90%.

Importantly, expectations toward SMEs in playing a role in various aspects of development are
lower, not only compared to big business but also international organizations and CSOs. This
can be explained by the relative weakness of the SME sector in Georgia. However, notably, the
low rating of SMEs as a major player in development is also illustrative of the low expectations
toward any future relative weight of the SME sector that, in addition to the current
underdevelopment of the sector, can be explained by low public awareness of the role of SMEs
in economic development as generators of the bulk of the economic wealth in highly developed
economies, and/or a certain scepticism towards the potential of SMEs in Georgia to become the
major engine of private entrepreneurship.

The expectations toward CSOs and international organizations are similar for all the three areas.

4.6 Perception of the Actual Role of the Private Sector in Development

Note: The same methodological limitation for public expectations in 4.5 above applies to the comparison
of data on the perception of the actual role of the various institutional sectors in addressing the needs of
development. (see Methodological disclaimer in 4.5 above)

More than a half of the Tbilisi population (53%) tends to think that, currently, in addition to
maximizing profits, large companies implement activities that respond to the needs of society
and contribute to development. 47% of the respondents disagree (see Chart 7)

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32
Chart 7: Perception of companies in Georgia as CSR-active.

AlsoAlso take of
take care care of public
public needs
andneeds and development
development (including 53%
protection
(includingofprotection
the environment)
of the
environment)

Take care of profit maximizing

Take care of profit maximizing 47%
only
only

44 45 46 47 48 49 50 51 52 53 54

The respondents were questioned about the actual state of affairs regarding the categorization of
the major players and the areas of their expected involvement, similar to the inquiry into public
expectations in section 4.5. above.

In general terms, the respondents acknowledge that all the players do take care of supporting
economic development; addressing social and socio-economic problems of society and
protecting the environment. However, the extent of the perceived actual efforts of the private
sector and government are much lower compared to the expectations, i.e. public demand. As a
consequence, the relative weight of the actual role of CSOs and International organizations is
higher.

Supporting economic development

According to the ratings by the respondents, big business outranks the government (27% to
23% respectively) for the aspect of supporting economic development. Interestingly, SMEs
rank last in the set, coming after CSOs and International Organizations the two outsiders in
expectations for desirable contribution to development. This once again points to the perception
of the weakness of the SME sector in the country.

Addressing social and socio-economic problems of society

The government and big business have almost equal ranking in the area of addressing social
and socio-economic problems of society (22% and 23%).

Protecting the environment

The government is considered a major player in protecting the environment (27%), followed
by big business, CSOs and International Organizations (equal rating of 15% each). SMEs (7%)
are the outsider of the set.

Interestingly, the responsibility for protecting the environment assigned to SMEs is highest
compared to any other area of development.

See Charts 8, 9 and 10 below for the statistical breakdown.

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33
 Chart 8.: Perception of the actual care/contribution of the major players in the area of Supporting economic
development
50 45% 47% 42% 46% 43% 45%
40% 39%
37%
40
27% 27%
30 23%
20 14% 12%
10%
10
0% 1% 0% 1% 0%
0
"Big business" SMEs Government Int'l Organizations CSOs

Doesn't care
Largely/More or less cares
Takes care of
Undecided

Chart 9.: Perception of the actual care/contribution of the major players in the area of Addressing social and
socio-economic problems of society
60 52%
50 44%
40% 42% 41% 43% 42% 43%
40 34% 34%
30 22% 23%
20 15% 14%
8%
10
0% 1% 1% 1% 1%
0
"Big business" SMEs Government Int'l Organizations CSOs

Doesn't care
Largely/more or less cares
Takes care
Undecided

Chart 10.: Perception of the actual care/contribution of the major players in the area of Protecting the
environment
60 52%
50 43% 41% 43% 41% 43% 41%
39% 40%
40 32%
27%
30
20 15% 15% 15%
7%
10
1% 1% 0% 1% 1%
0
"Big business" SMEs Government Int'l Organizations CSOs

Doesn't care
Largely/more or less cares
Takes care
Undecided

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34
 4.7 Current Expectation Gap
The gap between expectation and perception as regards the role of business in development is
considerably high; 93% of the respondents think that CSR is a voluntary obligation that should be
assumed by businesses and is a legitimate expectation on the part of society, while only 53% consider
that, in addition to profit maximizing, businesses Also take care of public needs and development
(including protection of the environment).
The ratios between expectation and perception concerning the current state of affairs in the selected
areas of development are very high as well. The Tbilisi population expects big business to be more
active in addressing the needs of supporting economic development, addressing social and socio-
economic problems of society and Protecting the environment.

The expectation to perception gap for definite action (does/should care for assessments) in the
supporting economic development category for big business is an astonishing 64% (the difference
between the expectation rating of 91% and the perception rating of 27%). As a comparison, the gap
for the government for the same category is 74%. The gap for SMEs is smaller (43%), due to low
expectations.

The gaps for definite action in addressing social and socio-economic problems of society are very
high as well: 65% for big business; 75% for the government; 46 % for small business; 60% for CSOs;
and 57% for International Organizations.

In the area of Protecting the environment (for definite action answers), big business lags behind
the expectations by 75%; government by 71%; CSOs by 67% and International Organizations by 65%.
The expectation to perception gap for SMEs is 75% on definite expectation (does/should care for
assessments). However, interestingly, probably because of the low environmental impact produced by
SMEs, perception of actual SME performance is 19% higher than expectation for less definitive answers
(should/does take care of to an extent assessments).

It should be mentioned that the expectation to perception gaps for all players, by area of development,
are smaller when the answers for definite action (does/should care for) are aggregated with those for
less definite action (should/does largely/more or less care).

In general terms, the gaps between the actual performance of the major players and their expected
course of action in selected areas of development are considerably high. On the one hand, respondents
clearly state that no major institutional player meets the current expectations; on the other hand,
government and big business have the highest ratings in meeting public expectations, that is, they
facilitate economic development (big business, 27%; government, 23%), address social and socio-
economic problems (big business, 22%; government, 23%), and protect the environment (big business,
15%; government, 27%).

35
 V. MOST DEMANDED AREAS FOR CSR

In order to ensure that the areas of CSR are identified and ranked within the discourse of local
society, as opposed to extraction of predictable guided responses that would have had little
practical value, the respondents were required to list and prioritize the areas of CSR as they
understand and perceive them. As an important part of mapping local public attitudes,
perceptions and expectations, another advantage of engendering spontaneous answers is that it
allows for an assessment of how, and in what terms, local society at large understands CSR and
whether and to what extent the average citizen differentiates between charity and CSR. This
information is especially important in planning and implementing CSR awareness campaigns as
well as specific CSR activities.

The list that was compiled by the spontaneous answers of the respondents includes such
activities as: Addressing the needs of economically vulnerable groups; Providing employment
to local communities; Corporate charity; Supporting the improvement of healthcare;
Supporting improvement in the education sector; Using local production inputs/raw
materials as opposed to imports; Taking care of own employees/good corporate welfare;
Improving living conditions of the local communities that live close to the area of operations;
Protection of cultural monuments, and funding theatres and exhibitions; Providing corporate
internships to students; Providing help in starting small business and start-up SMEs;
Voluntary environmental activities; Sponsorship of sports schools and sports competitions;
Repairing damage made to the environment by the company; Assisting farmers with
equipment, materials, access to finance and know-how; and Sponsorship of science and
research.

The most frequently referred-to factors include: Addressing the needs of economically
vulnerable groups (54%); Providing employment to the local communities (54%); and
Corporate charity (41%).

Chart 11 and Table 4 below provide an illustration of the extracted data.

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Chart 11: Priority areas of responsible business practice as perceived by the respondents (spontaneous answers)

Addressing
Addressingt he
theneeds
needsofofeconomically
economically vu lnerable groups
vulnerable 54%
Providing employment
employment to
to local c ommunities
local communities 54%
Corporate
Corporate charity
charity 41%
Supporting
Supporting tthe
he improvement
improvement of
of healthcare 38%
Supporting
Supportingimprovement
improvementininthe
theeducation
education ssector
ector 21%
Using local
Using production
local productioninputs/raw
inputs/rawmaterials
materialsas
as opposed
opposed to imports 14%
Taking
Takingc are
careofofown
ownemployees/good
employees/goodccorporate
orporate welfare 13%
Improvingliving
Improving livingconditions
c onditions
ofothe
f thlocal
e local communities
communities t hat
that livelive c lose
close to
to the
area of operations the area of operations 10%
Protection of of
Protection c ultural
culturalmonuments,
monuments,and andf unding
fundingt heatres
theatresand andexhibitions
exhibitions 9%
Providing c orporate
Providing corporateinternships
internshipstoto st udents
students 9%
Providing help
Providing in in
help starting
startingsmall
smallbusiness
businessand
andstart-up
start-up SMEs 8%
Voluntary
Voluntaryenvironmental
environmentalactivities
activities 5%
Sponsorship of of
Sponsorship s ports
sportsscschools
hools and
andssports
ports ccompetitions
ompetitions 5%
Repairing
Repairing damage
damagemade
madetotothe
the environment
environment byby tthe
he company
c ompany 5%
Assisting
Assisting farmers
farmers with wi th equipment,
equipment, materials,
materials, accessaccess to finance
to finance and
and know-
how know-how 4%
Sponsorship
Sponsorshipofofsci ence and
science and research
research 4%
U ncertain
Uncertain 1%

0 10 20 30 40 50 60

Table 4.: Ranking of priority areas of responsible business practices as perceived by the respondents

Priority areas identified17 Ranking

Addressing the needs of economically vulnerable groups 1

Providing employment to local communities 2

Supporting the improvement of healthcare 3

Supporting improvement in the education sector 4

Using local production inputs/raw materials as opposed to imports 5

Voluntary environmental activities 6

Sponsorship of science and research 7

Taking care of employees/corporate welfare: on-the-job training; improving working 8

conditions; corporate welfare; provision of insurance and economic stimulation

17 Priority areas were listed by the Focus Group Discussion participants.

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 Table 4.: Ranking of priority areas of responsible business practices as perceived by the respondents

Priority areas identified17 Ranking

Addressing the needs of economically vulnerable groups 1

Providing employment to local communities 2

Supporting the improvement of healthcare 3

Supporting improvement in the education sector 4

Using local production inputs/raw materials as opposed to imports 5

Voluntary environmental activities 6

Sponsorship of science and research 7

Taking care of employees/corporate welfare: on-the-job training; improving working 8

conditions; corporate welfare; provision of insurance and economic stimulation

Protection of cultural monuments, funding theatres and exhibitions 9

Providing help in starting small business and start-up SMEs (with equipment; access 10
to venture capital and know-how)

Improving living conditions of the local communities that live close to the area of 11
operations (e.g. repairing/building roads, water supply)

Assisting farmers with equipment, materials, access to finance and know-how 12

Sponsorship of sports schools and sports competitions 13

Not surprisingly, Providing employment to local communities ranked second from the top due
to the high unemployment rates, relatively little interaction between the majority of companies
and local communities and the perceived threat of companies as regards the import of a foreign
workforce.

Voluntary activities aimed at protecting the environment or undoing existing damage is relatively
low on the agenda of the respondents. By and large, respondents expect the companies that
cause environmental damage to prevent or undo it. The expectations toward companies that by
the nature of their operations do not cause evident environmental damage are much lower.

It depends how much ones business [operations] cause actual damage to environment. We cant oblige
every company to take care of the environment F.G. 2. Woman. Age 30. Employed in private sector)

17 Priority areas were listed by the Focus Group Discussion participants.

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Low legal environmental restrictions and the lack of information regarding environmental
problems were referred to by focus group participants as the major impediments for corporate
environmental activities. According to respondents, quite often companies themselves are not
fully aware of the environmental damage they cause.

VI. CSR AND CORPORATE CHARITY

6.1 Forms of Corporate Giving18 Expected
Since there is no clear division between CSR and corporate charity in the discourse of the local
society, in the inquiry into the preferred forms of corporate giving, i.e. CSR and
Charity/Philanthropy, questions were put to the respondents in terms of local discourse. In
particular, corporate giving was differentiated according to the duration of impact one-off
corporate charities vs. corporate giving that produces long-term results that are often self-
sustaining, with no need for additional input on the part of the company. Subsequently, the
respondents who considered that, in addition to legal requirements, companies should
voluntarily be involved in practices that benefit society and the environment, were invited to
differentiate between the following two models; Companies voluntarily fund/implement
corporate giving projects that provide long-term sustainable results and Companies voluntarily
fund/implement one-time corporate charity that reaches the beneficiaries swiftly and directly.

The majority of Tbilisi respondents (78%) prefer CSR project activities, while 21% prefer
immediate and specifically targeted corporate charities (See Chart 12 below).

Chart 12: Preferred forms of corporate giving (objective assessment)

Companies voluntarily
fund/implement corporate
78%
giving projects that provide
long-term sustainable results

Companies voluntarily
fund/implement one-time
corporate charity that reaches 21%
the beneficiaries swiftly and
directly

Undecided 1%

0 10 20 30 40 50 60 70 80 90 100

In addition to the objective assessment of the forms of Corporate Giving practiced, the
respondents who think of Corporate Giving as including CSR as a legitimate option were asked
to provide a subjective view, that is, to list the Corporate Giving activities they would implement
were they to own/manage a company. The difference in opinions in fact repeated the pattern
seen with the assessment of the actually practiced forms of Corporate Giving; 72% of the

18 In this case, the term Corporate Giving is inclusive of all forms of corporate activities other than directly and solely

oriented at profit, such as charity, philanthropy, social investment and the projects that serve developmental ends
but may be commercially profitable in the mid- and long-term.

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 respondents prefer CSR projects with long-term impact. At the same time, the weight of pure
Charity and Philanthropy was 49% (See Chart 13 below).

Chart 13: Preferred forms of corporate giving (subjective assessment, frequency of answers19)

100%
90%
80% 72%
70%
60% 49%
50%
40%
30%
20% 7% 5% 8%
10%
0%
Companies voluntarily Companies voluntarily Only the area of CSR Inadequate response Undecided
fund/implement one- fund/implement was named with no
time corporate charity corporate giving distinction between
that reaches the projects that provide charity and CSR as a
beneficiaries swiftly and long-term sustainable choice
directly results

Such activities as helping finance children from low-income families, sponsoring sports,
sponsoring cancer surgeries, providing food to the poor, helping families that have many
children and will donate to Church were named among the ways of implementing corporate
charity.

The attitudes toward CSR and Charity as forms of Corporate Giving, as revealed through the
qualitative survey (focus groups), reflect the complexity of the argument rather than a simple,
good and bad approach and pre-supposition. It is true that the respondents clearly prefer a
CSR approach. However, at the same time they suggest that corporate giving projects that
provide long-term sustainable results (i.e. CSR) are not always as swift and effective as charity
that is at the same time the form that is more common and familiar to an average citizen. While,
importantly, acknowledging the advantages of CSR and largely preferring it to simple Charity,
still the respondents see a combination of the two as an optimal company policy approach.

In some cases charity is more relevant. Suppose somebody who has no insurance needs urgent medical
treatment he cant wait for a long-term and sustainable project eventually to help him.(F.G. 1.
Man. Age 31. Unemployed)

In my opinion, one [company] has to be equally ready to do either of the two. Charity is the best for
some particular cases, while more sustainable interventions that result in a sustainable outcome which is
even reproduced without further outside help are the best fit for the tasks that involve long-term
planning for long-term results. (F.G. 1. Age: 39. Unemployed)

6.2 Forms of Corporate Giving Practiced

With regard to the current state of affairs of Corporate Giving in Georgia, 16% of the
respondents believe that the Corporate Giving activities currently implemented by Georgias
private sector mostly include CSR projects. According to 32% of the respondents, companies are
by and large engaged with Charity and Philanthropy. Notably, the proportion of the most

19 Since the respondents were given an option of multiple answers, the sum of the % shall not be equal to 100%

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 sceptical respondents, who tend to think that businesses are not really implementing either of the
two, is an astonishing 45%. This data repeats the pattern revealed in Chapter 4.6 above (see Chart
7: Perception of the companies in Georgia as CSR-active).

It may be argued that, in denying the private sector any credit for Corporate Charity, this
proportion of the respondents suggests that, since current Corporate Charities are not performed
on an impersonal basis, this kind of corporate giving shall not be considered charity. In more
particular terms, as a hypothesis that requires verification, this sceptical argument may imply that,
except for rare cases, beneficiaries gain access to charity through their social networks and peer
or family contacts and, most of the time, company managers make decisions according to the
direct or indirect weight of the applicant within his/her (managers) social network.

See illustration of the data in Chart 14.

Chart 14: Perception of the current forms of Corporate Giving.

Companies do not practice any

45%
of the two Undecided 7%

Companies mostly practice

Companies practice both, CSR and charity 32% 12%
Charity and Philanthropy

Companies
Companies mostly practice CSRmostly
projectspractice CSRlong-term
that provide projects
Companies mostly implement
that provide long-term results 4%
results
CSR projects with sustainable 16%
long-term benefits

Companies mostly practice charity 32%

Undecided 7%

Companies do not practice any of the two 45%

0 10 20 30 40 50 60 70 80 90 100
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

6.3 Awareness of Particular CSR Activities and Corporate Giving

In a subjective inquiry, respondents were asked to identify companies that practice Corporate
Giving, and to name these activities thereby. The subjective data extracted is illustrative of both the
awareness of the types/forms of Corporate Giving and the degree of awareness of Corporate
Giving activities of particular companies (i.e. the degree of success of corporate Public Relation
policies in Georgia with regard to Corporate Giving) (See Table 5 for the data).

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 Table 5: Public Awareness of Corporate Giving in Georgia (subjective data for spontaneously nominated
particular companies operating in Georgia) .

The form of Corporate Giving Responde Respondents Respondents

Practiced nt recalls have heard have not heard
particular about the of a company
company particular type practicing any
of activity but particular type
cannot recall of activity
the name of the
company

Company takes care of employees

(improves labour
conditions/provides decent and safe
labour conditions, provides on-the
1 36% 20% 45%
job training/education for
professional development and
advancement, provides heath
insurance and recreation facilities)

Implements environmental
protection programmes/projects in
2 the area of operations and beyond 5% 23% 72%
(e.g. reforestation/protection of
forests, access to safe water etc.)

Company applies technologies that

3 reduce environmental damage and 8% 20% 72%
reduce the use of natural resources

Sponsors sports and sports

4 40% 32% 28%
competitions

Sponsors projects in the area of

5 healthcare (funds patient care, 34% 28% 38%
technological upgrade of clinics etc.)

Sponsors educational
institutions/organizations and
projects (provides technical
6 assistance and equipment to schools, 19% 32% 49%
vocational training in colleges and
universities, provides scholarships
for talented students etc.)

7 Patronizes/sponsors culture 23% 26% 50%

(restoration of cultural monuments,

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 rehabilitation of infrastructure for
theatres, museums etc.)

Provides charity to orphanages and

8 35% 31% 34%
shelters

Implements/participates in
9 employment programmes including 15% 33% 52%
setting up local supply chains

10 Practices corporate charity 47% 26% 27%

Large company assists farmers and

11 9% 16% 75%
SMEs

A remarkable 45 -75% of the respondents couldnt recall the names of companies that practice
particular areas of CSR, while the awareness of Corporate Charity and philanthropy is much
higher. At the same time, the proportion of the respondents who have heard of particular CSR
activities but cannot recall the names of the companies involved is significantly high as well.

Most frequently, the companies that practice charity and philanthropy were nominated: a
company Practices corporate charity (47%); Sponsors sports and sports competitions
(40%); Provides charity to orphanages and shelters (35%).

The most renowned CSR activity identified was CSR with regard to employees; Company takes
care of the employees (improves labour conditions etc.), ranked third from the top (36%). The
proportion of responses on other forms of CSR is relatively low: Large company assists farmers
and SMEs(9%); Implements/participates in employment programmes including setting up
local supply chains (15%); Implements environmental protection programmes/projects in the
area of operations and beyond (5%); Company applies technologies that reduce environmental
damage and reduce the use of natural resources(8%).

The majority of respondents evidently recall charitable rather than CSR activities from current
corporate practice. This pattern suggests that charity and philanthropy as forms of Corporate
Giving are more common compared to CSR, and that the awareness of the CSR practiced by
companies is low.

6.4 Expectation to Perception Gap for the Forms of Corporate Giving

The gap between expectations and perceptions with regard to Corporate Giving is significantly
wide. The proportion of the respondents who believe that CSR is a legitimate option for
companies is 93% (see Chapter 4.3 Chart 3). 78% of the 93% (that is, 73% of the total number)
prefer a long-term CSR approach in Corporate Giving, while 21% (20% of the total number)
prefer simple charity that does not intentionally target long-term results (see Chapter 6.1 Chart
12). As for the perception of the current performance of companies, 32% of all respondents
believe that companies are engaged in corporate Charity and Philanthropy, and 16% that they are
practicing CSR in their corporate giving (See Chart 14 in Chapter 6.2).

Chart 15 below depicts the expectation to perception gap for the types of Corporate Giving. The
gap for CSR is a significant 57%. Interestingly, the expectations for corporate Charity and

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 Philanthropy are lower than the perception of the current activities of the companies. However,
this obviously should not be directly interpreted as an indicator of companies delivering more
Charity and Philanthropy than required. Rather it illustrates the proportion of respondents by
answers.

Chart 15: Expectation gap for the forms of Corporate Giving

20%
100%
73%
Expectations
50% 20%
16% 32% Perceptions
0%
CSR Charity/Philanthropy

Perceptions Expectations

In general, comparison reveals that companies are implementing many fewer CSR projects and
activities than expected by society and/or that public awareness of the actually implemented CSR
projects is low.
---

As a summary to Chapter VI, it can be assumed that the Tbilisi population has a strong
preference for CSR activities that provide sustainable results in the long-term. At the same time,
respondents see particular advantages of charity and support a combined approach. This attitude
is probably caused by the fact that Corporate Charity is more frequent and, subsequently, the
citizens are more informed about this type of Corporate Giving. Thus the population is less
familiar with CSR activities.

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 VII. PREFERRED MODELS OF CORPORATE GIVING
The term the Models of Corporate Giving herein refers to the particular arrangement of partnership
between the stakeholders in the process of implementing CSR projects. The list of possible
arrangements used in the inquiry was developed by Focus Group Discussion participants. The
government, CSOs, other companies and International Organizations were identified as the
stakeholders/potential partners of a CSR-sensitive company looking for an optimal set up to
implement a CSR project. The reflections of the respondents as to the optimal arrangement for
CSR partnerships within the current institutional, social and economic reality are illustrated in
Table 6 below.

Table 6: Ranking of preferred models for implementing CSR

Model Ranking

Company addresses public need/problem using its own financial and managerial
1
resources independently , with no outside help

Large company provides full or partial funding for a programme/project

2
implemented by the state

Several large companies address public need/problem through a pooling of

3
resources

Large company funds a CSO that addresses public need/problem 4

Large companies fund international organizations to addresses public

5
need/problem

According to the respondents, the engagement of the company using its own human and
financial resources is the most effective and reliable way of implementing a CSR project, which
reflects a certain scepticism regarding partnership between several stakeholders, whose
involvement details a perceived risk of delaying decisions and increasing the costs of a project.
This prevailing opinion may also represent a reflection of the attitude toward the role and actual
performance of the government and CSOs in possible or actual projects that fit the definition of
CSR.

Practicing CSR in partnership with the government is ranked above business-to-business

partnership, and has the second from top rating within the list a ranking interesting in itself, as
it contrasts with both the pro-market and deregulatory policies of the government and a strong
public trend in support of small government and a free market, regardless of the current socio-
economic problems in Georgia (see 3.2. above for illustration). The high ranking of public-
private partnership in the list can be explained by the current political-economic dynamics; in
particular, several highly visible large-scale infrastructure rehabilitation projects have been
implemented by the government, which signals the interest of the government to improve the
livelihood of communities nationwide. Consequently, since the government is directly engaged in
activities similar to those of CSR projects, respondents perceive a natural link to implementing
CSR through public-private partnerships.

The next in the list is CSR activities performed through business-to-business partnerships. This
mode of partnership has a relatively low rating because there are very few visible precedents, and

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 there is a possible perception that competitors or companies in different sectors and industries
are unlikely to work in partnership.

CSOs and International Organizations were considered the most unlikely partners to a CSR-
friendly company. The overall rating of CSOs within society must be relatively low and the
involvement of CSOs as an additional link implies additional costs. As for International
Organizations, any scenario under which a company would provide funding to an International
Organization to implement a project sounds unrealistic to a Georgian, inasmuch as international
organizations are considered foreign donors that endure the deficiencies of bureaucracy and a
poor understanding of the local context.

VIII. MOTIVES FOR PRACTICING CSR

The practical importance of the data regarding public perception of the motives for practicing
CSR is self-evident. The data of the survey, including a breakdown of the opinion by particular
motives, is provided in the Chart 16 below.

Chart 16: Public Perception of Motives for implementing CSR (spontaneous answers)

Earning
Earningbetter
betterpublic
publicand
andconsumer
consumer reputation 56%

Better
Betterpublicity
publicity and PR 37%

Because business
Because business is isusing
usingpublic
publicresources
resources and
and has to
has to
15%
voluntarily
voluntarily givegive back
back to the
to the society/community
society/community
Because government
Because governmenthas
haslimited
limitedresources
resources to
to address
address all
all
public needs 13%
public needs

Taking
Takingcare
careofofemployees
employeeswill
willincrease
increase their loyalty 13%

Because
Becausecompanies
companies damage
damage the
the environment
environment 10%

Better
Better relations
relations with
with government
government 10%

Undecided
Undecided 3%

Other 1,3%

0 10 20 30 40 50 60 70 80 90 100

Note: Other motivations referred to included: Georgians must help each other; businesses are best equipped
to do it in the most effective way; and This way may reduce unemployment.

Earning better public and consumer attitude outranks all other motives, having a 53%
frequency of reference. Respondents believe that practicing CSR is simply profitable in the mid-
and long term; earning good reputation with society and giving back to the community will only
increase company reputation, which in turn will result in increased profits.

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 This kind of activity will draw more public attention to the company and induce a positive attitude in
the consumers (F.G. 2: Woman. Age:45. Employed in Private Sector)

From a perspective of an average citizen, or a consumer, if you will, the company that takes real care
of its employees and the problems of the community deserves respect and approval. (F.G. 2: Woman.
Age 35. Employed in Public Sector)

Better publicity and PR is the second most common motive nominated, with a frequency of
37%. The argument voiced in Focus Group Discussions suggests that, whether one intends it or
not, CSR activities become an effective part of Public Relations and publicity, with all the
relevant benefits.

This is an advertisement in itself. It creates the image of a company as one that plans to be around for a
long time and is strong enough to take care of people (F.G. 2. Woman. Age 45. Employed in the
Private Sector)

A company may use it for advertisement it [CSR practices] makes the company more respectable and
attracts consumers to it (F.G. 1. Woman. Age 36)

Because business is using public resources and has to voluntarily give back to the
society/community was the third most frequent spontaneous answer (15%). The argument,
as put by the respondents, is a call for a voluntary social solidarity, rather than a strict demand to
undo social injustice.

Because government has limited resources to address all public needs; this argument,
which implies that the government cant, and probably shouldnt, respond to all public needs,
and that the private sector has certain advantages as a problem-solver, rated the forth in the list
(13%).

Remember the recent case with forest fire? there was a forest fire in Borjomi National Park and the
government lacked the capability to extinguish it. They asked [a private businessman, philanthropist20]
to help. So, he funded the task and managed to have it completed. (F.G.: 2. Man. Age 37.
Unemployed in Private Sector)

There is no government that could address all problems - right? So, it [government] should only welcome
outside help by business. If businesses solve some of the problems, do a part of the job for the
government still the government will get full credit for what has been done (F.G.: 2. Woman. Age 32.
Unemployed)

Taking care of employees will increase their loyalty had a response frequency of 13%.
The respondents regard this aspect of CSR as a voluntary, yet purely pragmatic and thus
obligatory choice, and clearly understand the link between the loyalty and productivity of
employees and corporate policies that take care of the dignity and welfare of its employees.

20 The name is removed as a matter of privacy.

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 Better relations with government through addressing socio-economic or environmental
problems and repairing/preventing environmental damage Because companies damage the
environment- appeared at the bottom of the list and rated 10% each.

Interestingly, despite the fact that the CSR concept is new to Georgian society and no significant
awareness campaign has been implemented, the folk tradition in scarce and often indirect and
intuitive CSR awareness, revealed through the study, includes almost the entire argument for why
a company must be motivated to practice CSR. In the first instance, respondents point to such
most tangible pragmatic benefits as consumer loyalty and promotion, and improved public
relations.

IX. STIMULI FOR CSR EXPECTATIONS AND AWARENESS

Expected Stimuli for CSR
The majority of the responses emphasize the decisive role of the government in creating stimuli
for CSR: The government should introduce tax incentives for companies that implement CSR
(81%); The government should create a business-friendly environment in which companies will
practice CSR truly voluntarily without any outside guidance (72%); The government should
create a fund for social projects; business should donate corporate money (60%); The
government should oblige businesses to undertake CSR activities (51%). (see Chart 17 below)

Chart 17: Perception of stimuli for CSR (spontaneous answers)

Governmenttotointroduce
Government introducetax
taxincentives
incentivesfor
for companies
companies that
that
81%
inplement CSR
inplement CSR
Governmenttotocreate
Government createaabusiness-friendly
business-friendly environment
environment in in
whichcompanies
which companieswill
willpractice
practiceCSR
CSRtruly
truly voluntarily
voluntarily without
without 72%
any outside guidance
any outside guidance
Consumerstotoopt
Consumers optfor
forthe
theproducts
productsand
andservices
services of
of CSR-
CSR-
60%
friendly companiesfriendly companies

Governmenttotocreate
Government createaafund
fundfor
forsocial
socialprojects;
projects;business
business to
to
60%
donate corporate money
donate corporate money

Government
Government to obligetobusinesses
oblige businesses to undertake
to undertake CSR
CSR activities 51%
activities

Cooperationofofcompanies
Cooperation companies with
with CSOs
CSOs 37%

Other
Other 2%

Undecided
Undecided 1%

0 10 20 30 40 50 60 70 80 90 100

The insistence on tax incentives as the major stimulus for CSR, as well as CSR as an essentially
voluntary choice, was strongly emphasized during the Focus Group Discussions.

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 [the government] shall by no means oblige anybody a little good will just to offer some incentives,
reduce taxes to let one do good for people this is what government should do (F.G. 2. Man. Age:
33. Employed in NGO sector.)

Remarkably, the issue of consumer awareness as a tool for stimulating CSR rated immediately
after the arguments for tax incentives and creating a business-friendly environment. This can be
considered as an early indicator of the emergence of CSR-friendly consumer behaviour patterns.

The population should be more demanding if we dont like what the company does we shall not
buy their products (F.G. 2. Woman. Age 32. Employed in Public Sector)

The argument for the Government to create a fund for social projects to be supported by
corporate donations rated as high as the consumer behaviour argument (60%).

The frequency of such responses as Government to oblige business to undertake CSR

activities and Cooperation of companies with CSOs ranked lower (51% and 37%
respectively).

The demography of the responses is worthy of special attention. A remarkable 89% of

individuals employed in the public sector, and 85% of those respondents who work in the
private sector, refer to tax incentives as the major stimuli for CSR. The lowest frequency of this
answer was observed with employees of the NGO sector.

The frequency of answers that suggest government action which challenges the voluntary
character of CSR, i.e. Government to oblige business to undertake CSR activities and
Government to create a fund for social projects to be supported by corporate donations is
inversely proportional to the strength of the educational background of the respondents.

Awareness
The study revealed a low awareness of the Tbilisi population with respect to the existing CSR
incentive exemption from profit tax in the case of charitable activities21. For the sake of
simple comparison between awareness of the tax incentive for charity and the rate of awareness
of other tax reductions and exemptions, the inquiry included questions regarding such major
policy initiatives as the reduction of income tax to 12% and the full exemption of individual
entrepreneurs from income tax (see results in Chart 18).

21 The law states that companies are exempt from 8% profit tax for the amount donated to charitable organizations.

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 Chart 18: Awareness of tax incentives including tax incentive for charity (Have you heard of the listed tax
exemptions?)

74%
Individual entrepreneurs are exempt from income tax
26%

No
70%
Reduction of the income tax to 12% Yes
30%

Businesses are exempt from profit tax if the amount is 80%

spent for charity spent for charity 20%

0 10 20 30 40 50 60 70 80 90 100

Only 20% of the respondents had heard about tax incentives for charity, compared to similarly
low figures of a 30% awareness level for the reduction of income tax, and a 26% awareness of
the exemption for individual entrepreneurs.

X. IMPEDIMENTS TO CSR
The inquiry into impediments for CSR targeted the 47% share of respondents who considered
that, in Georgia, companies currently take care of profit maximizing only and are not receptive
to CSR (Chapter 4.6 Chart 7). The majority of the responses (39%) identify a lack of will on the
part of companies to internalize and practice CSR as the reason for the lack of CSR activities in
Georgia. The second most frequent answer refers to the absence of particular incentives by the
government for CSR activities. The frequency of answers that identify problems in business-
government relations is 15%. A significant 13% argue that, largely, whether or not expected or
demanded, CSR is not a natural function for businesses and this is why CSR activism is rare in
Georgia. Another argument suggests that practicing CSR may have a counterproductive effect,
that is, to inflate expectations of and demands on CSR-friendly companies, which may put them
in a no-win position. Lack of funds (8%) and no tax incentives (7%) were the least frequently
referred-to factors. However, it must be taken into account that the no tax incentives
argument can be regarded as a subset of the no support and incentives on the part of the state
argument that rated second from the top (24%). (Chart 19 includes the entire dataset for the
question).

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Chart 19: Perception of impediments to CSR. (spontaneous answers)

Nothing prevents companies but selfishness and the lack of a

39%
sense of responsibility
sense of responsibility

No support and incentives on the part of the state 24%

Problems in business-government relations 15%

This is not the business of businesses 13%

Companies w ary that this w ill increase the demands made of

10%
them them

No clear public expectation or demand 9%

Lack of tradition and experience w ith companies 9%

Lack of finances w ith companies 8%

No tax incentives 7%

Undecided 8%

0 10 20 30 40 50 60 70 80 90 100

XI. INFORMATION REGARDING CORPORATE GIVING AND CSR

This chapter includes the findings related to the currently available and requested information
about the private sector in general and CSR in particular. This includes: ranking the sources of
information by intensity/frequency of coverage and public trust; the character of available
information (negative vs. positive); the perception of whether the available information is
sufficient; as well as whether Social Reporting is required and what forms would be preferred.
This data is essential for planning CSR awareness activities and the promotion of particular CSR
activities.

11.1 Ranking of the Major Sources and Media of Information

The majority of Tbilisi inhabitants (95%) receive information from TV channels. The relative
weight of the printed media is 32%, followed by word of mouth channels ones peer
contacts and social network (28%). Advertisement rated relatively low, at 13%, radio at 12%, the
Internet at 11% and product labels at 9%. 3% of the respondents claim that they mostly receive
information through direct contact with company establishments, and 2% that they dont receive
information about the private sector at all. (See Chart 20)

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 Chart 20: Information regarding the private sector and CSR by media.
Don't receive information at all 2%
TV Channles 95%
Printed Media 32%
Word of Mouth (peer contacts, social network) 28%
Advertisements 13%
Radio 12%
Internet 11%
Product Labels 9%
Direct contact with company establishment 3%

0 10 20 30 40 50 60 70 80 90 100

11.2 Trustworthiness of Available Information by Source

The respondents rated the trustworthiness of the sources/media of information listed in 10.1
above on a scale of 1 to 5. On the whole, all sources of information listed rated above 3.0
(average rating 4). Interestingly, the respondents trust word of mouth (rating 4.0), i.e. peers
and personal social networks which, it should be noted, rated only 28% for the amount of
received information (see Chart 20. above), more than any mass media. Surprisingly, despite
relatively low access to the Internet and the low rate for the amount of information available
(11%) the second highest rating of 3.6 was given to the Internet as a perceived more
independent, impartial and complete source than any other mass media. At the same time, it is
possible that this high rate of trust is, ironically, due to the low rate of Internet access; the
respondents may, to an extent, be idealizing the impartiality of Internet sources.

While the majority of respondents consider quality of products and services to be the major
determinant of the success and reputation of a company (see 4.1 and 4.2 above), company
advertisement and product labels are the least trusted. As for TV, the strongest media with a
95% coverage rating, it was assigned 3.3 and rated only third from the top together with printed
media (32% coverage rating) and radio (12% coverage).

Chart 21: Trustworthiness of Sources of Information

"Word of Mouth" (peers and social netork) 4

Internet 3.6

TV 3.3

Radio 3.3

Printed Media 3.3

Product Labels 3.2

Advertisement 3.1

0 1 2 3 4 5

Participants in the qualitative part of the study are sceptical of the ability of mass media to
provide reliable, unbiased information based on fact. In addition, they suggest that the

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disseminated information regarding Corporate Giving and CSR is largely a part of PR and
advertisement, and thus cannot be taken as impartial and factually correct, and that any
information submitted by a company needs to be checked rather than taken for granted.

On the whole, what we get through mass media channels raises many questions. How can I have an
attitude without getting information which is reliable and complete? (F.G. 2. Man. Age 32. Employed
in NGO sector)

There is no sufficient information and I dont know how reliable is it nobody proved it and I didnt
check it either. I cant trust the information provided by just anybody, and have to double check (F.G.
1. Woman. Age 38. Unemployed.)

Also, it depends on who is submitting the information, and for what purpose. If it is ones rival or
competitor, negative information is placed; if the company itself, its only positive. Its hard to trust either
of the two. (F.G. 2. Woman. Age 35. Employed in Public Sector)

11.3 The Nature of Available Information Negative to Positive Information

Ratio
According to the respondents, information available on the private sector is largely positive
(average 6.2 on a scale of 1 to 10). The respondents employed in the NGO sector, as well as the
higher income group respondents, are more positive than others in their assessment of the
nature of information presented. (See Chart 22 below)

Chart 22: The nature of information on the private sector (negative to positive on a scale of 1 to 10)
Average of the Total 6,2

High Income Group 7,1

Middle Income Group 6,6

Low Income Group 6

Employed in NGO Sector 7,2

Employed in Public Sector 6,6

Employed in Private Sector 6,2

Unemployed 6

1 2 3 4 5 6 7 8 9 10

11.4 Is Available Information Sufficient?

Almost one half of the respondents (46%) consider the content and amount of information on
the private sector to be sufficient. However, more than a half demand more information
(current information is more or less sufficient, 22%; current information is not sufficient,
24%; and current information is not sufficient at all, 7%)

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 Chart 23. Is Available Information on the Private Sector Sufficient?
Current information is sufficient 46%

Current informatiuon is more or less sufficient 22%

Current information is not sufficient 24%

Current information is not sufficient at all 7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Participants of the focus group discussions highlight the lack of information regarding
companies on the one hand, and the superficiality and incomplete character of the available
information on the other. The majority put forth and supported the argument that, by and large,
the information available serves the purpose of advertisement and thus gives no answers to many
questions, including those related to a responsible business operations approach in company
practices.

Well yes, there is some information out there but this information is mostly [a part of] company PR.
For example, I know nothing about what technologies are being used and how safe the products are which
they produce. This type of information is not open and transparent (F.G. 1. Man. Age 31.
Unemployed)

A part of the respondents point out that media outlets have started covering business-related
issues relatively recently and mostly on the Business Courier TV show.

Until recently, there was almost nothing in the media but now, after they started that business TV
Show Business Courier there is some interesting information on companies (F.G. 1. Man. Age:
31. Unemployed)

Importantly, the respondents strongly suggested that a certain secrecy and lack of transparency
on the part of the companies harms public trust toward the companies and that, since there are
no watchdog institutions and the information placed in the media is mostly positive, there is a
broad sense of lack of information that makes society inherently suspicious of companies.

A lot of information comes from TV but the thing is that this info doesnt reflect the reality. Nobody
talks about what, in reality, these companies do and how. Nobody knows it except for the companies
themselves, and its not fair (F.G. 1. Man. Age: 45. Unemployed)

11. 5 Expectations as to the Content of Information Demanded

The proportion of the respondents who indicated a lack of information was asked to
spontaneously identify what kind of information, in terms of content, they would like to receive.
As a result, 40% of the population demanded more information on the quality of products and
services, that is, how the products and services have been produced. 20% of the respondents were
eager to know more about the history of the companies, to ascertain whether the means by
which the company gained success meets their (the respondents) perceptions of fair play. A
remarkable 15% demanded more information on whether the company in focus is involved in
Corporate Giving. 14% would be interested to learn more about the major shareholders of the
enterprises. 13% inquired about the actual role and contribution of the company to the
development of the country and society at large. The proportion of the respondents interested in

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54
learning more about company practices with regard to employees and company profits is 10%
for each, and only 6% demanded information on the environmental impact that results from
company operations (see the data series highlighted in blue in Chart 24.).

The patterns identified through spontaneous answers were confirmed when, in addition to
spontaneous inquiry, the respondents were asked to rank the given answers from a list.
Remarkably, the frequency of such responses as involvement in Corporate Giving; the
contribution of the company to the development of the country and society; and the origin of
the production inputs (local or foreign) was respectively 67%, 65% and 60%.

I would like to know more about whether a company takes care of people and gives back some of its wealth to
society with no pressure from anybody (F.G. 1. Woman. Age: 39. Unemployed)

As for me, I am really eager to learn what resources they [companies] use in their production. Georgia used to
produce fruit, wheat and a lot more, right? We shouldnt be importing wheat, flour, fruit and meat as a minimum.
Its ridiculous! (F. G. 1. Man. Age 31. unemployed.)

Chart 24: Ranking of expectations in respect of the content of information about companies
Quality of
Quality of products
products and services
services (how
(howthe
the products
productsand
and 78%
services have been produced)
services have been produced) 40%
67%
Involvement of the company
company in
in Corporate
CorporateGiving
Giving 15%

Actual impact 65%

impactof
ofthe
thecompany
companyon
ondevelopment
development 13%

Thesource
sourceof
ofproduction
production inputs (local/foreign) 60%
The (local/foreign) 12%

Themeans
means used
used in
in creating
creating aa succesful 56%
The succesfulcompany
company 20%

Environmental impact 52%

Environmental impact of
of company
companyoperations
operations 6%

Company policies
policies with 49%
Company with regard
regardto
toemployees
employees 10%

Information on the major shareholders 46%

Information shareholders 14%

Relations 41%
Relationswith
withthe
thegovernment
government 9%
Information
Information on the profits of
of the
the company
company (corporate
(corporate 33%
transparency) transparency) 10%

The 20%
The number
numberof
ofemployees
employees 5%

Other
Other 2%

Uncertain
Uncertain 14%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100
%

11.6 Demand for Social Reporting22 and CSR Information.

According to the data retrieved through the study, there is a clear expectation and demand for
more information regarding CSR practices of companies, as a part of Social Reporting. 66%
believe that it is necessary for companies to report their CSR activities openly to society, while
15% of the population see no need for such information. (See Chart 25)

22 The practice of publicly communicating a companys economic, environmental, and social performance; there is

no single international standard in respect of this practice, which is relatively new for Georgia.

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 Chart 25: Public expectations for Social Reporting

There is no need for

Social reporting, 15%

Social Reporting is
Largely Necessary,
18%

Social Reporting is
Necessary, 66%

11.7 Preferred Media and Sources to Meet Demand for Social Reporting and CSR
Information
Those respondents who identified the need for social reporting were questioned regarding their
preferred form/media for receiving this information. As a result, 90% would prefer television as
the major medium of information. Despite the relatively low trust rating of television, the choice
can be explained by easy access and intense information flow. 43% would mostly rely on printed
media (See Chart 20. above). Remarkably, despite the fact that the publication of annual social
reports still has to be introduced (currently practiced by a handful of companies), 22% expect to
learn about company CSR from annual reports printed and placed on the Internet. 21% expect
companies to place the relevant information on a website, 17% to include information in
corporate advertising materials (booklets, brochures), 14% expect the information somehow to
be attached to company products and services, and only 5% would prefer independent audit
reports as the best source of information (See figures in Chart 26).

Chart 26: Preferred media and sources of social reporting and information in respect to CSR activities.
TV
TV 90%

Articlesininprinted
Articles printedmedia
m edia 43%

AnnualSocial
Annual Social Reports
R eports 22%

Company website
Company website 21%

Company advertising
Company adv ertisingmaterials
materials 17%

Inf ormation attached

Information attached to
t o company
company
products/serv ices
products/services
14%

Independent audit/reports
Independent audit/reports of
independent
independent experts
experts
5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Society is not sufficiently informed about companies and their responsible business practices,
while demand for information regarding Corporate Giving exceeds the current supply of this
information. Respondents expect much more information to be available on particular aspects of
Corporate Giving in general and CSR in particular. However, there is no clear demand for a
significant increase in the intensity of information flow. In terms of content, the information on

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quality, that is, how products and services have been produced, is the most required. The interest
toward more information regarding Corporate Giving practices is evidently high as well.

The current provision of CSR-related information can hardly be assessed as satisfactory in its
degree of outreach and impact on the general public. The majority of the respondents had heard
about neither particular Corporate Giving and CSR activities nor development-friendly practise
and policies of companies; a remarkable 45 -75% of the respondents could not identify the
companies that practice particular areas of CSR, while the awareness of Corporate Charity and
philanthropy is much higher (Table 5. Section 6.3). At the same time, the proportion of
respondents who had heard of particular CSR activities but could not give the names of the
companies involved is significantly high as well. It can be assumed that the quality of general
public outreach in providing information on CSR activities by the companies is below
satisfactory, which indicates the need to introduce proper Social Reporting and effective
placement of the reports in various media channels and sources of information.

XII. CONCLUSIONS AND RECOMMENDATIONS FOR COMPANY MANAGERS

AND PROMOTERS OF CSR IN GEORGIA

This chapter provides a summary of the analysis, both the terms and format of which are
intended to offer practical recommendations to professionals - that is, both to company
managers who see the pragmatic and moral value of CSR as an indispensable approach when
building and operating a successful business, and promoters of CSR who believe that the
promotion of responsible business practice, within both the local business community and
society, has a potential, no less than that of international development assistance or policies of
competent and democratic governments, to contribute to development. It addresses the most
pragmatic questions as to the optimal courses of action, which are determined by considering
how Georgians perceive CSR, the specific gaps between their expectations and perceptions as
regards responsible business practice, and the gap between required and available information, as
well as what sources and media of information prove to be more trusted and effective than
others. For the sake of convenience, the recommendations for company managers are
differentiated from those for CSR promoters.

12.1 The Meanings of CSR in Local Context

One of the major practical outcomes of the Study is that it allows for the mapping of various
aspects of the ways in which Georgian society perceives CSR and how it differentiates and
prioritises between the areas of Corporate Giving. This information is valuable to company
managers and CSR promoters to the extent that they need to understand the context in which
they operate. More specifically, knowing which areas and forms of Corporate giving are more
demanded than others helps company managers plan their CSR in an optimal way; in a way that
responds to the needs of society and thus helps optimize the use of company resources while
ensuring maximum benefit to both society and company image. Obviously, thorough
understanding the local operational context that is, the local logic in which CSR is considered a
legitimate choice for businesses and even a requirement is indispensable in ensuring effective
awareness-building through the successful communication of ideas in the language and logical
structure that have local appeal.

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 What the Tbilisi Population thinks about CSR
The study revealed that:
The majority of citizens (72%) consider the private sector as an important/
relatively important player in development.
The expectation to perception gap as to the role of business in development is
considerably high (93% of the respondents expect companies to be active players
in development, while only 53% believe that businesses are in fact playing this
role). The gaps measured in the areas of supporting economic development,
addressing social and socio-economic problems of society and Protecting
the environment are even higher. The Tbilisi population gives credit to big
business for supporting economic development, addressing the social and socio-
economic problems of society and Protecting the environment but it requires
companies to be more active in these three priority areas.
An overwhelming majority of respondents (93%) think that CSR is a legitimate
and necessary choice for companies and that, in addition to the primary
objective of maximizing profit, and conforming to current legal requirements,
companies should assume a voluntary responsibility for addressing the needs of
society and take into account developmental implications in the process of decision
making and business operations.
Companies are implementing far fewer CSR projects and activities than expected
by society. The expectation to perception gap for CSR activities in Georgia is
significantly high as well.
CSR and Responsible Business Practices approaches strongly determine
company reputations and trust within the local society.
Respondents clearly regard CSR as the choice of Big Businesses rather
than SMEs, which are perceived as being too weak to respond to public demand
or produce a tangible impact. However, SMEs are expected to practice CSR to
whatever extent possible.
Three legitimate areas for CSR were identified: supporting economic
development; addressing social and socio-economic problems of society and
protecting the environment.
The most frequently cited Forms of Corporate Giving and CSR are:
addressing the needs of economically vulnerable groups, practicing effective
corporate charity, creating decent working conditions and a system of corporate
welfare for employees, supporting improvement in the education and healthcare
sectors, hiring a local workforce as opposed to importing workers, building local
supply chains/using local raw materials and production inputs as opposed to
imports, assisting local farmers and SMEs by various means, repairing damage
caused by company operations.
For many interrelated reasons other than ignorance and denial of importance,
respondents do not consider Human Rights, Labour Rights, and Anti-
corruption as being priorities for CSR in Georgia.
Although Corporate Charity is a more common form of Corporate Giving,
citizens have a strong preference for CSR activities that provide sustainable results

58
 in the long-term. However, at the same time respondents see particular advantages
in the practice of a combined approach to address a wide spectrum of problems
effectively.
Engagement of a company while using its own human and financial resources is
seen as the most effective and reliable way of implementing a CSR project, followed
by partnership with government, partnership with other companies, partnership with
CSOs, and lastly with international organizations.
Despite the fact that the CSR concept is new to Georgian society and no significant
awareness campaign has been implemented, the folk tradition includes almost the
entire argument for why a company should be motivated to practice CSR. In the first
instance, respondents identify such most tangible pragmatic benefits as consumer
loyalty and improved public relations followed by the social solidarity argument
which implies that business has to voluntarily give back to the community the
benefits it reaps through using public resources.
The majority of the responses emphasize the decisive role of the government in
creating stimuli for CSR: The government should introduce tax incentives for
companies that implement CSR (81%); The government should create a business-
friendly environment in which companies will practice CSR truly voluntarily without
any outside guidance (72%); The government should create a fund for social
projects; business should donate corporate money (60%); The government should
oblige business to undertake CSR activities (51%).
Awareness of existing incentives for Corporate Giving is low (20%).
Factors referred as the impediments to CSR in Georgia include the lack of will
and experience on the part of companies (39%), problems in business-government
relations (15%), the risk of inflated expectations and demands on CSR-friendly
companies (8%), and no tax incentives (7%).

What does this mean for a company manager in Georgia?

Since the majority of citizens believe that companies have a role to play in
development, CSR is a legitimate and necessary option for companies and an
expression of social solidarity that determines company reputation with consumers
and provides for such pragmatic benefits as consumer loyalty and endorsement, plus
improved public relations. Internalizing CSR in company management and practices
in response to public demand is a precondition for the success of a company in the
market.
CSR is more important for big companies as society is more demanding of them.
However, SMEs are expected to do their best as well.
In response to current public demand, Supporting economic development;
addressing the social and socio-economic problems of society and protecting the
environment are the priority areas of engagement in which companies are likely
to be most effective in terms of both developmental impact and the strengthening of
company reputation within society.
The range of possible particular activities within the priority areas is wide. It
includes, but is not limited to, addressing the needs of economically vulnerable groups,

59
 practicing effective corporate charity, creating decent working conditions and a concern
for the corporate welfare of employees, supporting improvement in the education and
healthcare sectors, hiring a local workforce as opposed to importing workers, building
local supply chains/using local raw materials and production inputs as opposed to
imports, assisting local farmers and SMEs by various means, and repairing damage
caused through company operations. International corporate experience with particular
activities is rather rich, and a substantial amount of information is available through
various sources, including those of the UN Global compact. The relevant information is
available at www.unglobalcompact.org and through the Centre for Strategic Research and
Development of Georgia (CSRDG), a partner organization of the UN Global Compact
in Georgia ( www.csrgd.ge)
It is true that corporate charity is the most common form of Corporate Giving in
Georgia. However, importantly, a majority of citizens believe that a combination of
Charity coupled to CSR activities that provide long-term benefits is strongly preferable
to mere charity. Thus, in the process of building or restructuring the Corporate Giving
of a company, and to ensure maximum impact and benefits from the use of company
resources for Corporate Giving activities, it is recommended that a combined package is
designed that includes well-structured CSR as a major component.
A majority of the respondents consider practicing CSR while using its own resources
as potentially the best option for a company. However, they regard partnership with the
government and CSOs as a legitimate alternative that could be considered, depending on
the particular case. According to international practice, partnerships with government
and/or CSOs prove very effective, since it often helps optimize the use of company
resources, reduce costs and increase effectiveness (especially in case of the involvement
of CSOs that can contribute operational, geographic area-specific or community-specific
knowledge and experience).
Since the majority of citizens support and demand corporate Giving and CSR practices,
and at the same time are convinced that the government can and perhaps should create
incentives for CSR, a company, a group of companies or a business association that may
consider lobbying for CSR incentives can rely on broad public support. This support
can be gained in partnership with CSOs. Studying international experience of providing
various forms of CSR incentives may prove very useful.

What does this mean for a promoter of CSR in Georgia?

Despite the fact that CSR awareness in Georgia is low, no large-scale CSR awareness
campaign has been held in Georgia; there are no consumer pressure groups, no watchdog
institutions, and consumer awareness is at an embryonic stage. Nevertheless, since the
majority of citizens demand CSR, general public attitudes are conducive of building
CSR awareness effectively and within a reasonable timeframe.
Local CSR and Corporate Giving discourse is different from the standard international
corporate discourse, which reflects the difference in economic, socio-economic,
economic-cultural and institutional conditions between a developing country like Georgia
and Western post-industrial societies. Sensitivity toward these differences and the ability
to introduce and promote the idea of CSR in the language of the local discourse
may prove crucial for success, inasmuch as such an approach allows for the effective
communication of ideas. Further objective-specific research and the involvement of
local experts of Georgian society in the design and implementation of CSR awareness
campaigns may prove effective in this regard.

60
 It is true that SMEs are weak in Georgia and public expectations for SMEs to practice
CSR are respectively low. These factors should be taken into account while planning the
promotion and practice of CSR by SMEs.
Supporting economic development; addressing the social and socio-economic
problems of society and protecting the environment are three major themes that
constitute local CSR discourse in which Human Rights, Labour and Anti-Corruption
are not considered relevant. It is recommended that the strategy of any CSR promoter
responds to public interest and demand by providing extensive information (definitive
logic, best practice, a variety of potential arrangements etc.) on the three areas considered
top priorities locally. Similarly, integration of the remaining currently absent areas
(Human Rights, Labour and Anti-Corruption) into the local CSR discourse should be
done gradually through examples and logic that fit local conditions and understanding, and
starting by building basic awareness and recognition of these areas as a relevant part of
CSR.
Clarifying the difference between Corporate Charity and CSR is obviously
an important aspect of building CSR awareness, especially in societies where the
understanding of this difference is vague, and Charity is much more common. However,
it may prove counterproductive to promote CSR in such a way that it de-legitimizes
Charity. The optimal strategy for awareness building may be to present the two aspects
of Corporate Giving in such a way that the advantages of CSR for a wide range of cases
is presented equally persuasively to company managers, the government, CSOs and the
general public.
It is evident that society lacks awareness of the benefits of multi-stakeholder
partnerships in practicing CSR. It is important for a promoter of CSR to develop a
good understanding of the interplay of factors that give rise to this gap. The benefits of
such a partnership should be explained through general logical argument as well as the
extensive use of particular real life examples from international and local practice.
The majority of citizens support and demand corporate Giving and CSR practices and at
the same time are convinced that the government can and perhaps should create incentives
for CSR. This creates a potentially conducive background for activities aimed at lobbying
for CSR incentives as a part or extension of any public awareness campaign.
The expert study of the Current impediments to CSR is necessary for active promotion
and lobbying for a CSR-friendly environment.

12.2 Media and Sources of Information

Obviously, the degree to which the CSR activities of a company are recognized by society, and
even immediate beneficiaries, and the degree of success in building CSR awareness nationwide,
strongly depends on the proper presentation of the relevant information. The Study produced
data on the shortfall of information required by ordinary citizens according to areas and forms of
CSR, as well as what media sources are more effective than others. Thus, this data is equally useful
for company managers and CSR promoters.
Society is not sufficiently informed about companies and their responsible business
practices. Demand for information regarding Corporate Giving exceeds current supply.
The current provision of CSR-related information can hardly be considered satisfactory
in respect to the degree of outreach and impact on the general public. Almost one half
of the respondents (46%) consider the content and amount of information on the
private sector sufficient. However, more than a half demand more information (current

61
 information is more or less sufficient, 22%; current information is not sufficient,
24%; and current information is not sufficient at all, 7%).
Respondents expect considerably more information on particular aspects of
Corporate Giving in general and CSR in particular. However, there is no clear
demand for a significant increase in the intensity of information flow on the private
sector in general.

The rating of media and information channels (for information on the private
sector) is as follows: TV, 95%; printed media, 32%; word of mouth channels ones
peer contacts and social network, 28%; advertisement, 13%; radio, 12%; internet, 11%;
product labels, 9%; direct contact with company establishments, 3%; and 2% claim they
receive no information.

Interestingly, the respondents trust word of mouth sources i.e. peers and personal
social networks, more than any mass media. Surprisingly, despite relatively low access to
the Internet and the small amount of information available, the second highest rating of
3.6 was given to the Internet as a perceived more independent, impartial and complete
source than any other mass media.

As for the content of the demanded information, information regarding involvement in

Corporate Giving; the contribution of the company to the development of the country
and society; and the origin of the production inputs (local or foreign) was the most
demanded (the frequency of answers were, respectively, 67%, 65% and 60%). A 20%
share of the respondents are eager to know more about the history of companies to
ascertain whether the means by which success of the company was achieved meets their
(respondents) perceptions of fair play. A remarkable 15% demand more information on
whether the company in focus is involved in Corporate Giving. 14% would be interested
to learn more about the major shareholders of the enterprise. 13% inquire about the
actual role and contribution of the company as regards the development of the country
and society at large. The share of the respondents interested in learning more about
company practice with regard to employees and company profits is 10% for each, and
only 6% demand information on the environmental impact that results from company
operations.

According to the data retrieved through the study, there is a clear expectation
and demand for more information regarding company CSR practice in the form
of complete Social Reporting. 66% believe that it is necessary that companies
openly report their CSR activities, while 15% of the population see no need in such
information.

The rating of the information media for Social Reporting of companies is as follows:
television -90%; printed media - 43%; printed annual reports - 22%; reports placed
on internet/company websites - 21%; corporate advertisement materials (booklets,

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 brochures) - 17%; somehow attached to company products and services - 14%;
independent audit reports - 5%.

What does this mean for companies practicing CSR?

The demand for complete information on Corporate Giving and CSR is evident. The
data of the study serves as a justification for providing more information as a part of
company public relations as opposed to merely following a western fashion trend.

Obviously, TV channels are the most effective media of information in terms of

outreach and, consequently, proper coverage of company CSR on TV should be
provided. At the same time, given the high rating of word of mouth sources of
information in terms of trustworthiness, building awareness of the CSR practices of a
company among its employees should not be ignored (Georgians tend to trust personal
sources of information more than mass media, and ensuring that employees spread the
message may prove very productive). Printed media and radio should not be ignored
either but, taking into account the high level of trust toward Internet sources revealed
through the study, it is necessary to ensure that properly structured information on
company CSR and Corporate Giving is placed on company websites and those of
business association(s) the company may be a member of, as well as online business
news outlets.
Given the strong interest of the general public regarding how products and
services are produced, as much information as possible on a CSR approach in
company operations and production cycles should be placed on company websites, in
advertisements, on product labels, in media coverage etc. Given the evident interest of
an average citizen, the placement of this information is a strong advertisement in itself.
In terms of content, in addition to how the products and services are being produced,
information on the actual role and contribution of the company to the development of
the country and society at large, plus the way a company cares for its employees and the
environment, will prove beneficial as well.
The strength of demand for proper Social Reporting is clear and evident. Meeting this
demand will prove advantageous in strengthening the reputation of the company and
the trust of consumers. Developing Social Reporting of the company at the current
stage, when this practice is not yet widespread in Georgia, confers an additional benefit
it places the company among the leaders who follow the requirements of the time
more promptly and effectively than others (including competitors). Social Reports are
produced once a year (by the end of every calendar year) and the process of writing
can be conducted by PR and/or CSR managers, Managers for Media Relations or other
line managers. Technical skills for Social Reporting are easy to acquire through simple,
brief training programmes. In addition to private consulting firms, from December
2007, relevant training will be provided by the Centre for Research and Development of
Georgia (CSRDG).
For effective outreach of information, various media sources should be used for
disseminating information contained in a companys social reports, or for providing
reports in full if/when relevant. These include TV, printed media, company websites
and Social reports published as hard copies (full versions of reports).
Independent audit reports may serve as a substitute for Social Reports produced
internally within the company. Some consulting companies provide independent social
audit services.

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 What does this mean for a promoter of CSR?

The demand for comprehensive information on Corporate Giving and CSR is evident; the
data of the study can serve as a justification for public awareness activities as driven by
demand, as opposed to being imposed from outside.
Concentrated and well-planned nationwide CSR awareness campaigns, including
extensive media coverage and, possibly, public advertisement (especially on TV), is likely
to prove effective, as opposed to small-scale activities of narrow outreach and instruments
limited to seminar activities and publications for distribution.
In terms of form and content in promoting CSR, it is necessary to combine the logic
of a moral choice for common good, with real life examples.
Consulting the data of the Study regarding the ratings of media and information
sources by the degree of outreach and public trust may prove very helpful when
deciding how best to disseminate information to increase public awareness.
The ranking of priorities in regard to the specific CSR information demanded, as revealed
through the study, should be taken into account while developing a thematic range of
CSR Public Awareness campaigns. The priorities, as determined by the general public
(respondents), should be addressed in proportion to the degree of interest.
Promoting the benefits of social reporting will clearly meet the demand on the part of
both companies and the general public. In the current context of Georgia, the promotion
of Social Reporting in itself may prove an effective method of promoting CSR awareness
on a large scale.

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 XIII. DEMOGRAPHY OF THE STUDY

More than a half of the respondents (57%) is male, 43% being female (see Chart 27).
Chart 27: Breakdown by Gender

male 43.3%
FemaleMale
56.7%
43.3%
Female 56.7%

The majority of respondents were between 25 and 54 years old (see Chart 28).
Chart 28: Breakdown by Age

18-24 years 15.2%

25-34 years 19.9%

35-44 years 21.0%

45-54 years 17.7%

55-64 years 12.4%

65 and above 13.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0 %

As for the marital status of the respondents, the majority, 61% are married, 25% single, 5%
divorced, and 9% widowed (see Chart 29).
Chart 29: Marital Status

Married 61%

Single 25%

Divorced 5%

Widowed 9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

The majority of respondents have higher education (59%). The proportion of the respondents
with secondary (13%), secondary vocational (14%), incomplete higher (10%) or graduate level
education is relatively low (see Chart 30).

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 Chart 30: Breakdown by Education

Secondary 13%

Secondary
14%
Vocational

Incomplete Higher 10%

Complete Higher 59%

Graduate 3%

0% 20% 40% 60% 80% 100%

About three in every ten respondents (31%) are unemployed, while students (8%), housewives
(10%) or the retired (16%) taken together make up a considerable share. 28% work for
employers, while 7% are self-employed (see Chart 31).
Chart 31: Breakdown by Employment Status (primary occupation)

Unemployed 31%

Student 8%

Housewife 10%

retired 16%

Self-employed 7%

Employed 28%

0% 20% 40% 60% 80% 100%

As for the sectors of employment, respondents were employed either in the private sector (50%),
or in the public sector (48%), the share of respondents employed in Non-Governmental
Organizations is only 2% (see Chart 32).
Chart 32: Breakdown by Employment Sector
Business (individual
50%
entrepreneur, ltd, etc.)

Public
48%
Institution/Organization

Non Governmental
2%
Organization

International
0%
Organization

0% 20% 40% 60% 80% 100%

The average household income of a relatively large proportion of respondents was 100-300
Georgian Lari per month for the last year. The share of respondents of low household income
average household income less than 100 Lari per month constitutes 17% (see Chart 33).

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Chart 33: breakdown by Household Income
GEL 51 - 100 17%

GEL 101 - 300 27%

GEL 301 - 500 20%

GEL 501 - 800 10%

GEL 800-1,000 7%

GEL 1,001 and above 5%

Does not know 10%

Refrains from answer 5%

0% 20% 40% 60% 80% 100%

In addition to objective parameters, the economic status of the Tbilisi population was evaluated
subjectively as well. Specifically, the respondents were asked to evaluate the financial situation of
their households. The majority of respondents (66%) consider their households to be poor. 5%
of respondents consider their households to belong to the high-income segment, while 24%
regard their households as being in the middle-income group. It should be noted that objective
and subjective evaluations of the level of household income of the household share a common
tendency (see Chart 34).
Chart 34: Subjective evaluation of the financial situation of the household

Low income 66%

Average income 24%

High income 5%

Refrains from answer 5%

0% 20% 40% 60% 80% 100%

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